Westland Helicopters v. Korean Air
In this case, cargo Claimants were held entitled to recover their costs, in addition to the limitation amounts provided by Art.22 of the Warsaw Convention, since the amount of the settlement offer, made by Korean Air within six months of the commencement of proceedings, was less than the payment they had made into court, which the claimants had accepted in satisfaction of their claim.
DMC Category Rating: Confirmed
This case note is based on an Article in the July 2003 Edition of the ‘Bulletin’, published by the Marine and Insurance teams at the international firm of lawyers,DLA. DLA is an International Contributor to this website.
On 22 December 1999, a Korean Air B747 aircraft crashed near Stansted Airport in the UK. One consequence of this was that the cargo on board, including a helicopter gearbox assembly and six packages of printing press equipment belonging to Westland Helicopters, was destroyed.
The contracts of carriage were governed by the Warsaw Convention
as incorporated into English law by the Carriage by Air Act 1961. Article 22 of
the Convention limits the carrier's liability for cargo to a sum calculated by
reference to the weight of the goods. Under Article 22(4):
In May 2000, the cargo insurers wrote to Korean Air setting out their subrogated claim for the value of the six packages and the helicopter gearbox, which they put at GBP£66,000 and GBP£900,000 respectively. In July 2000, Korean Air made an offer to settle based on a limit set out in the contract of carriage of US$20 per kilo, which worked out at US$12,720 and US$19,180. In November 2001, however, Korean Air put forward another offer, this time based on the Warsaw limits, of GBP£8854.88 and GBP£13,502.72, a total of GBP£22,357.60. This was not accepted and, in December 2001, proceedings were issued in the name of Westland Helicopters based on the value of the items, now put at GBP£66,000 and just over GBP£330,000.
In July 2002, Korean Air made payments into court under Part 36 of the Civil Procedure Rules, offering GBP£9,155.49 for the printing equipment and GBP£13,805.22 for the helicopter gearbox – a total of GBP£22,960.71. The payments were accepted on 14 August.
Normally, when a payment into court is accepted, the recipient is entitled to claim costs up to acceptance of the payment in. But Korean Air argued that Westland was not entitled to these costs because Article 22(4) of the Warsaw Convention applied, and this overrode any procedural provisions that were inconsistent with it.
Could a payment into court accepted by the claimant constitute "damages" for the purposes of Article 22(4)? The judge thought it could. The fact that Korean Air had paid an amount calculated in accordance with the Warsaw limit did not mean that damages had not been paid. Under the Civil Procedure Rules, acceptance of a payment in terminates the litigation, just as a judgment would do.
The purpose of the Convention was that a carrier's liability should be limited to a specific amount and the purpose of the costs provision was to encourage claimants to accept their due entitlement or be penalised. Had Korean Air got its sums right in November 2001, Article 22(4) would have applied. As it was, it did not and Westland could recover its costs.
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