IATA Legal Symposium 2012 5 – 7 February 2012 Shanghai China

1. IATA Legal Symposium 20125 – 7 February 2012Shanghai China Standard Ground Handling Agreement LAURA PIERALLINI STUDIO LEGALE PIERALLINI E ASSOCIATI WWW.STUDIOPIERALLINI.IT

2. IATA Legal Symposium 2012 – Shanghai China - 5/7 Febraury 2012 • The IATA Standard Ground Handling Agreement: an overview • The IATA SGHA provides general terms and conditions for optional use of air carriers and handlers. • The Aviation Ground Services Agreements Working Group (AGSA WG) publishes new versions of the SGHA every 5 years following detailed reviews. • The 2008 version of the SGHA in force, as published in the IATA Airport Handling Manual (AHM), is currently under review. STUDIO LEGALE PIERALLINI E ASSOCIATI www.studiopierallini.it

3. IATA Legal Symposium 2012 – Shanghai China - 5/7 Febraury 2012 The IATA SGHA current main issues There is a debate whether and, possibly, to what extent some provisions contained in the SGHA could be changed. There is growing concerns among airlines and airlines associations of different jurisdictions about the interpretation of art. 8 of the SGHA, which provides for aircraft damage from ground handling. In Italy, the situation is not clear due to the stance taken by some important insurance companies, according to which art. 8 of the SGHA provides for a total exclusion of responsibility for damages caused by handlers to air carriers. Moreover, to make things even worse, two different courts gave two opposite interpretations on that provision, especially as regards the exclusion of responsibility (as we will summarize better infra). This is a clearly distort interpretation of art. 8, which may lead air carriers damaged to bear unreasonable (economic) consequences. STUDIO LEGALE PIERALLINI E ASSOCIATI www.studiopierallini.it

4. IATA Legal Symposium 2012 – Shanghai China - 5/7 Febraury 2012 The provisions of Article 8 of the SGHA Article 8.1 provides for the general principle on legal liability of handlers; Article 8.2 sets down the exclusion of responsibility in respect of damage, death, delay, injury or loss to third parties caused by handlers and air carriers; Article 8.3 concerns the exclusion of responsibility with regard to damages caused by handlers occurred in the phase of loading and unloading; STUDIO LEGALE PIERALLINI E ASSOCIATI www.studiopierallini.it

5. IATA Legal Symposium 2012 – Shanghai China - 5/7 Febraury 2012 Article 8.4 refers to the specular exclusion of responsibility of air carriers with respect to damages caused to employees or goods of handlers; Article 8.5 sets down the exception to that general principle as set forth in article 8.1; Article 8.6 concerns specifically cargo, and provides for the principle according to which handlers shall indemnify the Carrier against direct loss of or damage to the Carrier’s cargo (excluding Mail) caused by the negligent act or omission by or on behalf of the handlers in the provision of the services and/or the supply of goods under this Agreement provided the limitation indicated therein. STUDIO LEGALE PIERALLINI E ASSOCIATI www.studiopierallini.it

6. IATA Legal Symposium 2012 – Shanghai China - 5/7 Febraury 2012 Articles 8.1 and 8.5 of the SGHA Article 8.1 states that Carrier shall not make any claim against the Handling Company and shall indemnify it (subject as hereinafter provided) against any legal liability for claims or suits, including costs and expenses incidental thereto, in respect of, inter alia: […] (d) damage to or loss of property owned or operated by, or on behalf of, the Carrier and any consequential loss or damage; arising from an act or omission of the Handling Company in the performance of this Agreement unless done with intent to cause damage, death, delay, injury or loss or recklessly and with the knowledge that damage, death, delay, injury or loss would probably result. STUDIO LEGALE PIERALLINI E ASSOCIATI www.studiopierallini.it

7. IATA Legal Symposium 2012 – Shanghai China - 5/7 Febraury 2012 Article 8.5 states that Notwithstanding Sub-Article 8.1(d), the Handling Company shall indemnify the Carrier against any physical loss of or damage to the Carrier’s Aircraft caused by the Handling Company’s negligent act or omission PROVIDED ALWAYS THAT the Handling Company’s liability shall be limited to any such loss of or damage to the Carrier’s Aircraft in an amount not exceeding the level of deductible under the Carrier’s Hull All Risk Policy which shall not, in any event, exceed USD 1,500,000 except that loss or damage in respect of any incident below USD 3,000 shall not be indemnified. For the avoidance of doubt, save as expressly stated, this Sub-Article 8.5 does not affect or prejudice the generality of the provisions of Sub-Article 8.1 including the principle that the Carrier shall not make any claim against the Handling Company and shall indemnify it against any liability in respect of any and all consequential loss or damage howsoever arising. STUDIO LEGALE PIERALLINI E ASSOCIATI www.studiopierallini.it

8. IATA Legal Symposium 2012 – Shanghai China - 5/7 Febraury 2012 The interpretation of articles 8.1(d) and art. 8.5 of the SGHA in the Italian Case- Law Italian airport managers and the leading insurance company allege that - pursuant to articles 8.1 and 8.5 of the SGHA - air carriers would have waived in advance to any and all actions of civil liabilities, in contract or in tort, against handlers damaging aircraft during the performance of ground operations. Such interpretation, according to Italian airport managers and insurance companies, should be grounded on the allegation that air carriers do generally cause damages to airport facilities, such as apron or airport ramps as a consequence of “heavy” landings or landings without landing gear(!) and fingers when approaching the airport station. The damages allegedly suffered by airport managers would also include costs for handling passengers’ claims related to damaged and/or lost baggage. STUDIO LEGALE PIERALLINI E ASSOCIATI www.studiopierallini.it

9. IATA Legal Symposium 2012 – Shanghai China - 5/7 Febraury 2012 As far as the matter above, two judgments have been recently issued: one by the Civil Court of Bari and the other by the Civil Court of Verona. The Civil Court of Bari, accepting the interpretation of the airport manager involved as defendant in such proceedings, deemed as applicable the invoked limitation/exclusion of liability The Civil Court of Verona, on the contrary, resolved not to apply any exclusion of liability and stated the airport manager being liable as a consequence of its gross negligence in performing handling services which caused damages to the plaintiff’s aircraft. STUDIO LEGALE PIERALLINI E ASSOCIATI www.studiopierallini.it

10. IATA Legal Symposium 2012 – Shanghai China - 5/7 Febraury 2012 The interpretation of art. 8 in other jurisdictions In most jurisdictions, the SGHA ensures that any determination of damage to aircraft is determined by “contract principles” and not by “tort principles.” In civil law systems, it is not sufficient that contractual damages be the immediate and direct consequence of the non-performance; they must have been foreseen or foreseeable at the time that the obligation was contracted unless there is intentional or gross fault. Such a provision is set forth in the French legal system (art. 1150 code civil), in the Québec code civil (art. 1613 C.C.Q.), in the Louisiana civil code (art. 1996), in the Italian codice civile (art. 1225). An interesting case was tackled in the US jurisdiction. The case can be summarized asfollow. STUDIO LEGALE PIERALLINI E ASSOCIATI www.studiopierallini.it

11. IATA Legal Symposium 2012 – Shanghai China - 5/7 Febraury 2012 On January 10, 2005, North American Airlines, Inc. (NAA) filed a complaint against Virgin Atlantic (Virgin) in the state of New York, claiming liability under common law and statutory theories of negligence for damages to the NAA aircraft as well as for consequential damages suffered by NAA. Both Aircraft Service International, Inc. (ASI) and Virgin were signatories to a Standard Ground Handling Agreement. NAA argued that Virgin was liable for all of NAA’s damages resulting from a collision under principles of common law negligence. NAA contended that ASI and Mach II Maintenance Corporation, (Mach II) were Virgin’s agents, so Virgin is vicariously liable for the damages they caused. Here, the Court found that ASI was in some measure responsible for the collision with the NAA aircraft and is contractually obligated to indemnify Virgin against damage to Virgin aircraft that resulted from ASI’s negligent operation of the ground support equipment and thus liable for the actual costs incurred by the damage. However, the court found that ASI is not liable for consequential damages suffered by Virgin, since the same contract forecloses that result unless the damages were caused intentionally or recklessly. (N. Am. Airlines, Inc. v. Virgin Atl. Airways,Ltd., 2006 U.S. Dist. LEXIS 92814.) STUDIO LEGALE PIERALLINI E ASSOCIATI www.studiopierallini.it

12. IATA Legal Symposium 2012 – Shanghai China - 5/7 Febraury 2012 Final remarks and possible action to be taken To conclude, though internationally some associations, like the Airport Services Association (ASA), argues that the 2008 IATA SGHA should remain unchanged in the 2013 edition of the SGHA, because any changes to article 8 of the SGHA would be counterproductive we can uphold that art. 8 should be changed to make it clearer, especially as concerns a better coordination between the general principle as set down under its paragraph 1(d) and the exception to it as provided for under its paragraph 5. STUDIO LEGALE PIERALLINI E ASSOCIATI www.studiopierallini.it