Lost baggage damages limited by Montreal Convention

Nunez v. American Airlines (N.Y. App. Jan. 26, 2007).  In a brief opinion, the appeals court upheld the trial court’s decision applying Article 22(2) of the Montreal Convention to limit the two passengers’ damages for loss of their baggage.  The trial court had entered a judgment against the airline for $2,990 (apparently $1,495 per passenger), from which the passengers had appealed.  The appeals court opinion does not explain how the judgment amount had been determined, but I can make a guess.

Article 22(2) provides that “[i]n the carriage of baggage, the liability of the carrier in the case of destruction, loss, damage or delay is limited to 1,000 Special Drawing Rights for each passenger unless the passenger has made, at the time when the checked baggage was handed over to the carrier, a special declaration of interest in delivery at destination and has paid a supplementary sum if the case so requires.”  Article 23(1) provides that “[t]he sums mentioned in terms of Special Drawing Rights in this Convention shall be deemed to refer to the Special Drawing Right as defined by the International Monetary Fund.  Conversion of the sums into national currencies shall, in case of judicial proceedings, be made according to the value of such currencies in terms of the Special Drawing Right at the date of the judgement.”  The “Special Drawing Right” is an artificial currency used by the International Monetary Fund for internal accounting purposes.  As of today’s date (January 30, 2007), one SDR is valued at US$1.49164, which means that an airline’s liability to a passenger for lost baggage under the Convention is currently limited to $1,491.64.  The IMF maintains a web page – imf.org/external/np/fin/rates/rms_sdrv.cfm – where the value of the SDR is updated daily.

Since each of the two passengers in Nunez recovered damages of $1,495, one SDR was apparently valued at US$1.495 on April 25, 2006, the date the trial court entered its judgment.

Note:  On June 30, 2009, ICAO adjusted the liability limits set forth in Articles 21 and 22 of the Montreal Convention due to inflation.  Accordingly, effective December 30, 2009, the liability limit set forth in Article 22(2) was increased from 1,000 SDRs to 1,131 SDRs.  See U.S. Department of Transportation, Inflation Adjustments to Liability Limits Governed by the Montreal Convention Effective December 30, 2009, 74 F.R. 59017-18 (Nov. 16, 2009).

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