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MH370: Out-of-court settlements highly likely, say experts

Publication Date : 12-05-2014

 

The lack of any evidence indicating what caused Flight MH370’s disappearance raises a legal conundrum that is expected to force Malaysia Airlines (MAS) into out-of-court settlements with next-of-kin, aviation law experts said.

Since MH370 disappeared more than two months ago, no wreckage has been found to even confirm a crash, let alone apportion blame.

But the relatives of the 239 people on board can still go after MAS because under international aviation law it is an airline’s responsibility to prove it was not to blame for an accident.

“On the surface, (MAS) is responsible,” Jeremy Joseph, a Malaysian lawyer, said.

The “burden of proof” rests on MAS to clear its name, he added.

AFP reports that under Inter­national Civil Aviation Organisation rules, next-of-kin are entitled to an automatic minimum of about US$175,000 (RM560,000) per passenger, regardless of fault, payable by an airline’s insurance company.

The Beijing-bound plane disappeared on March 8 and is believed to have crashed in the Indian Ocean.

No significant legal moves have yet been made as families monitor an immensely difficult search in vast ocean depths.

“When there is no cause identified, it is hard to see how the airline has or has not shown the absence of fault,” said Alan Tan, a professor of aviation law at the National University of Singapore.

The size of any damages would depend on where lawsuits are filed.

Next-of-kin can file in the country where an airline is based, where tickets were purchased, where the passengers were headed or where they lived.

Since most passengers were from China or Malaysia, most cases could be filed in the two countries, where courts are more conservative in awarding damages than in countries like the United States.

Damages are typically based on the lost lifetime earnings of a victim.

“In the US, settlements usually are in the US$1mil (RM3.2mil) to US$3mil (RM9.6mil) range. For Malaysians or Chinese, salaries are lower, and hence, recoveries will be lower,” said Paul Stephen Dempsey, director of the Institute of Air and Space Law at Canada’s McGill University.

But legal experts said few cases will likely end up in court. They expect undisclosed out-of-court settlements between families and MAS and its lead insurer Allianz.

This would allow MAS to lay the matter to rest and focus on rebuilding its image.

In the case of Air France flight 447, which crashed in the Atlantic with 228 people aboard in 2009, the airline’s insurers made compensation payments to relatives.

Only a small number of lawsuits were filed, with a Brazilian court awarding one family more than US$500,000 before its flight data recorders were recovered in 2011.

Allianz would bear the brunt of any payouts for MH370.

MAS told AFP its insurance coverage is adequate for all eventualities, declining to give details.

Courts are unlikely to apportion any blame to Boeing, engine manufacturer Rolls Royce, or other parties without evidence implicating them.

MAS has begun making some payouts to families under an “advance compensation process” but has declined to reveal details.

Lawsuits must be filed within two years of an accident.

In Nay Pyi Taw, Malaysia’s partners in Asean gave their commitment to help in the search for MH370.

Prime Minister Najib Tun Razak said leaders attending the Asean Summit had expressed their sympathy to Malaysia and the affected families.

 

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