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 Shanghai Court Interprets Montreal Convention in Air Transport Dispute
Category:Judicial News  
Subject:Legal proceeding   ; International trade   ; Post and logistics   ; Transportation  
Publish Date:10-25-2021

In September 2021, Pudong New Area People's Court of Shanghai Municipality (the “Court”) made a systematic interpretation of provisions in the “Convention for the Unification of Certain Rules for International Carriage by Air (also known as the “Montreal Convention”), which is widely applied in the field of international carriage by air.
In October 2016, a company engaged in automobile components production imported two batches of new and old production equipment from abroad. A transportation company was the consignee responsible for transportation agency services and signed an air waybill with an airline company, agreeing that the airline company would transport the equipment from France to Shanghai Pudong International Airport. In the process of transportation, the two batches of goods were disordered, and the goods were found to be inconsistent with the waybill during customs inspection, and thus were returned to France. As a result, the company engaged in automobile components production was punished to pay fines by the customs. After negotiation, the fine was paid by the transportation company. In September 2018, the transport company filed a claim against the airline company on the basis of the air waybill. However, the negotiation between the transport company and the airline company failed, and the transport company initiated an action before the Court, demanding that the airline company bear the damages of over CNY 78,000 that it paid to the automobile components company and the incurred interests.
After hearing the case, the Court held that the key issues of the dispute were whether the plaintiff's action exceeded the time limit stipulated in the international convention. Pursuant to Article 35 (1) of the Montreal Convention, “the right to damages shall be extinguished if an action is not brought within a period of two years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped”. Also Article 35 (2) of the Montreal Convention stipulates that “the method of calculating that period shall be determined by the law of the court seized of the case". Therefore, the relevant period shall be determined by Chinese laws in this case.
Through the systematic interpretation of Article 35 of the Montreal Convention, the court held that the “period” in this article constitutes a limitation of actions, rather than the preemption claimed by the airline company. As for limitation of action, relevant provisions on suspension and discontinuance of statute of limitations shall apply. The transport company claimed its rights against the airline company in September 2018, which was in line with the circumstances in relation to the discontinuation of the statute of limitations. As of the date when it claimed its rights, it did not exceed the two-year period stipulated in the Montreal Convention, and its right of action was still protected by law.

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