Aviation

• Author: International Law Group

During December of 1996, the Siemens group of companies and the Schenker group of companies renewed their long-standing arrangement dealing with the latter's carriage of Siemens products by air from Germany to Australia. Later, Schenker Germany agreed to transport a large shipment of telecommunications gear via Singapore Airlines and thence by truck to Schenker's bonded warehouse about 2.5 miles from the Melbourne airport.

Schenker International Deutschland GmbH (SID) consolidated this consignment with cargo from its other customers and forwarded it on Singapore Airlines to Tullamarine Airport in Melbourne. Two days after it got to Tullamarine, an employee of Schenker International (Australia) Pty. Ltd. (SIA) collected the consignment and placed it on a truck for delivery to its bonded warehouse. As a result of the conceded negligence of SIA's driver, however, part of the consignment fell off the truck on the way and was damaged. Siemens Ltd. sued SIA and SID for damages in the New South Wales Supreme Court. The decisive issue was whether a limitation-of- liability clause in the standard form of air waybill applies during the road transport of cargo to a bonded warehouse located outside the perimeter of Melbourne Airport. If so, the defendant's liability for damages drops from almost A$1.7 million inclusive of interest to US$ 74,680 plus interest.

The primary judge held that the limitation provisions contained in either the Convention for the Unification of Certain Rules relating to International Carriage by Air as Amended [49 Stat. 3000; T.S. 876; 137 L.N.T.S. 11 (Warsaw, 1929)] and/or the waybills did not apply. He then found the Schenker Companies jointly and severally liable to Siemens Australia in the amount of $ 1,688,059.50 including interest.

The Court of Appeal agreed with the primary judge's holding that the Warsaw Convention did not apply. That Court did rule, however, that the waybill governed the rights and obligations of the parties with respect to the accident and that this included the limitation on liability contained in Clause 4. The Court set aside the orders of the trial judge and, instead entered judgment for Siemens Australia in the limited amount of $US 74,680 plus interest. Siemens Australia then obtained review by the High Court. In a 3 to 2 vote, the High Court allows the appeal and reinstates the judgment of the primary court.

The Court first notes that, under their century-old Richtungsverkehr (literally, "direct...