[Federal Register Volume 60, Number 140 (Friday, July 21, 1995)]
[Notices]
[Pages 37701-37703]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-17827]



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DEPARTMENT OF TRANSPORTATION

Office of the Secretary


Order Approving and Granting Antitrust Immunity

SUMMARY: This document approves and grants antitrust immunity to the 
agreement in Docket 48831 and those portions of the agreement in Docket 
49596 as set forth in the order. The order is published as an appendix 
to this document.

DATES: The order was issued in Washington, DC, July 13, 1995 and the 
order became effective on July 13, 1995.

FOR FURTHER INFORMATION CONTACT: Lawrence Myers, U.S. Department of 
Transportation, Office of the Assistant General Counsel for 
International Law, room 10105, 400 Seventh Street, SW., Washington, DC 
(202) 366-9183.
Patrick V. Murphy,
Acting Assistant Secretary for Aviation and International Affairs.
[Order 95-7-19; Docket 48831 Resolution 600b Docket 49596 R-1, R-8]
    Agreements adopted by the Cargo Services Conferences of the 
International Air Transport Association relating to conditions of 
contract.

Order

    Various members of the International Air Transport Association 
(IATA) have filed two agreements with the Department for approval 
and antitrust immunity under sections 41309 and 41308 of Title 49, 
United States Code, and Part 303 of the Department's regulations. 
They were adopted at the annual meetings of the Cargo Services 
Conferences in 1993 and 1994 for amended intended effectiveness on 
October 1, 1994.\1\

    \1\ IATA memoranda CSC/Reso/062, Docket 48831; and CSC/Reso/063, 
Docket 49596.
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    In 1989, IATA adopted Resolution 600b, which was a new, 
abbreviated version of the standard Air Waybill Conditions of 
Contract contained in Resolution 600b(II), which it was intended to 
replace. Portions of Resolution 600b were disapproved by the 
Department in Order 89-10-52 and the decision confirmed on 
reconsideration in Order 91-10-21. As a result, the airlines 
continued to use Resolution 600b(II). In 1993, IATA amended 
Resolution 600b, taking into account the Department's expressed 
concerns, and submitted the amended version for approval in Docket 
48831 with an intended effective date of October 1, 1995. In 1994, 
IATA further amended Resolution 600b, taking into account certain 
U.S. court decisions interpreting provisions of the

[[Page 37702]]
Warsaw convention as applied to the contents of a cargo waybill. The 
latter amendments to Resolution 600b were submitted to the 
Department as R-1 in Docket 49596, with a revised intended effective 
date of October 1, 1994, for the resolutions in both dockets.\2\

    \2\ A French version of the amended Resolution 600b (R-1) was 
submitted as Recommended Practice 16006 (R-8) in the same docket, 
along with various other cargo resolutions. Orders 95-2-3 and 95-3-
12 approved all these resolutions except R-1 and R-8. In addition, 
an expedited agreement amending resolutions 600AA, 600AB, 600B(II) 
and 670A was filed in Docket 49595 and was approved by Order 94-7-
17.
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    We will approve the text of Resolution 600b as submitted in 
Docket 48831, CSC(15)600b. As IATA noted in its justification in 
that docket, Order 89-10-52 approved the language of paragraph 7.1.1 
only upon the understanding that the words ``immediately after 
discovery of the damage'' do not constitute a time limit for filing 
claims independent of the specified 14-day period from the date of 
receipt of the cargo. IATA assures us that the words are ``intended 
to encourage prompt reporting'' without constituting a separate 
requirement. We will therefore approve IATA's language, subject to a 
condition implementing this understanding.
    However, with respect to the additional amendments to Resolution 
600b submitted in Docket 49596, CSC(16)600b, we have two substantial 
difficulties. First, IATA has proposed a new paragraph 4.2 which 
states that in carriage to which the Warsaw Convention does not 
apply, a carrier ``may'' permit a shipper to increase its cargo 
liability limitation by declaring a higher shipment value and paying 
a supplemental charge if so required. The cargo liability limitation 
for this non-Warsaw carriage is the same as that set forth in 
paragraph 3 for Warsaw carriage: 17 Special Drawing Rights (as 
defined by the International Monetary Fund) per kilogram of cargo 
lost, damaged or delayed. Paragraph 4.2 is intended, in IATA's 
words, to provide the same ``option'' to shippers that is provided 
by paragraph 4.1 for Warsaw carriage. However, paragraph 4.2 is 
clearly permissive, while the language in paragraph 4.1 indicates 
that the shipper's right to declare a higher value under the 
Convention is absolute for cargo accepted for carriage. We have not 
objected to the extension of the Warsaw cargo liability limit to 
non-Warsaw carriage, but are firmly of the view that, in return, the 
complementary right of the shipper to declare excess value should be 
no less assured in the case of non-Warsaw carriage. We will 
therefore defer action on paragraph 3 of Resolution 600b until IATA 
changes the word ``may'' to ``shall'' in paragraph 4.2, or adopts 
other acceptable language that assures the shipper of the same right 
to declare excess value in non-Warsaw situations.
    Our second problem with the latest amendments to Resolution 600b 
is the addition of language to the Notice on the face of the air 
waybill and similar language to paragraph 7 on the back which may be 
interpreted by carriers, shippers and the courts as expanding the 
applicability of the Warsaw Convention to carriage not heretofore 
considered covered by its provisions, and which could cause great 
uncertainty over its application.\3\

    \3\ The words ``shipper agrees that the shipment may be carried 
via intermediate stopping places which the carrier deems 
appropriate'' would be added to the Notice on the face of the 
waybill, and the underlined words ``Carrier is authorized by the 
shipper to select the routing and all intermediate stopping places 
that its deems appropriate or to change or deviate from the routing 
shown on the face hereof'' would be added to the last sentence of 
paragraph 7.
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    IATA indicated in its justification that the proposed language 
was prompted by ``recent court decisions'' interpreting Articles 8 
and 9 of the Warsaw Convention.\4\ Article 8 of the Convention 
requires, inter alia, that the air waybill shall contain various 
particulars, including ``the agreed stopping places.'' Article 9 of 
the Convention provides that if the waybill does not contain these 
and other particulars, the carrier shall not be entitled to avail 
itself of the provisions of the Convention which exclude or limit 
its liability. Apparently, IATA is concerned that courts may deny 
the carriers the Warsaw limits on their liability unless they list 
all intermediate points that might be used for any type of stop or 
else incorporate language such as that proposed which arguably makes 
any stop selected by the carrier one agreed to by the shipper.

    \4\ IATA provided no further explanation of its position, but, 
upon request, provided the Department with a reference to one case, 
Maritime Ins. Co. LTD. v. Emery Air Freight Corp., 983 F.2d 437 (2nd 
Cir. 1993).
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    If this is indeed IATA's position, we do not share its premise 
or agree with its interpretation of the proposed language. In the 
context of cargo service, whose hallmark is routing flexibility 
which benefits shippers as well as carriers, the language proposed 
by IATA is not objectionable from an operational standpoint, and we 
therefore approved it on that basis by Order 94-7-17 in the context 
of amendments to Resolution 600b(II). In this sense, the language is 
merely an elaboration of the right of the carrier under the waybill 
to determine the routing of the shipment.
    However, it is neither necessary nor appropriate to construe the 
proposed language as broadening the meaning of ``agreed stopping 
place,'' as that term is used in the Warsaw Convention, where it 
appears not only in Article 8 but also in Article 1. Article 1 
confines the applicability of the Convention itself to carriage 
between at least two contracting parties or within one contracting 
party if there is an ``agreed stopping place'' in another 
jurisdiction, whether or not it is a contracting party.
    One of the primary goals of the Convention was legal 
predictability, and that goal would be undermined if ``agreed 
stopping place'' in Article 1 had been intended to encompass all 
possible routings rather than just those expressly agreed to by the 
shipper and entered on the waybill. Such an interpretation would 
mean that the determination of many important contractual rights of 
both carriers and shippers would depend on operational vagaries 
which may not reflect assent by either party for jurisdictional 
purposes and, indeed, which may engender wasteful litigation over 
the facts of individual routings which deviate from points specified 
on the waybill.
    We will approve IATA's language as proposed in CSC(16)600b, but 
only upon the condition that its reference to intermediate points 
does not constitute an ``agreed stopping place'' for purposes of 
jurisdiction under Article 1(2) of the ``Warsaw Convention.'' We 
similarly clarify that our approval in Order 94-7-17 of amended 
paragraphs 8./8.1 and 8.2 of Resolution 600b(II), submitted in 
Docket 49595, is based on the same understanding.\5\

    \5\ We understand that IATA intends for Resolution 600b to 
replace Resolution 600b(II), but wish to make clear the scope of our 
approval of the latter provisions to avoid the possibility of legal 
confusion until Resolution 600b comes into effect.
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    Acting under Title 49 of the United States Code, as amended, 
(``the Code'') and particularly sections 40101, 4013(a), 41308 and 
41309:
    1. We do not find Resolution 600b, set forth in the agreement in 
Docket 48831, to be adverse to the public interest or in violation 
of the Code, subject to the condition that the phrase ``immediately 
after discovery of the damage'' in paragraph 8.1.1 of Resolution 
600b does not constitute a time limit for filing claims independent 
of the 14-day period specified elsewhere in that paragraph;
    2. Except as provided in finding paragraph 3 below, we do not 
find R-1 and R-8 of the agreement in Docket 49596, to be adverse to 
the public interest or in violation of the Code, subject to the 
condition that the reference to intermediate stopping places in 
paragraph 2 of Resolution 600b does not constitute an ``agreed 
stopping place'' for purposes of jurisdiction under Article 1(2) of 
the Warsaw Convention;
    3. We find paragraph 4.2 of Resolution 600b, set forth in R-1 of 
the agreement in Docket 49596, to be adverse to the public interest 
and in violation of the Code; and
    4. These agreements are a product of the IATA tariff conference 
machinery, which the Department found to be anticompetitive but 
nevertheless approved on foreign policy and comity grounds by Order 
85-5-32, May 6, 1985. The Department found that important 
transportation needs were not obtainable by reasonably available 
alternative means having materially less anticompetitive effects. 
Antitrust immunity was automatically conferred upon these 
conferences because, where an anticompetitive agreement is approved 
in order to attain other objectives, the conferral of antitrust 
immunity is mandatory under title 49 of the United States Code, as 
amended.
    Order 85-5-32 contemplates that the products of fare, rate and 
services conferences will be subject to individual scrutiny and will 
be approved provided they are of a kind specifically sanctioned by 
Order 85-5-32 and are not adverse to the public interest or in 
violation of the Code. As with the underlying IATA conference 
machinery, upon approval of a conference agreement, immunity for 
that agreement must be conferred under the Act. Consequently, we 
will grant antitrust immunity to the agreements set forth in finding 
paragraphs 1

[[Page 37703]]
and 2 above, subject to the conditions imposed therein.

Accordingly,

    1. We approve and grant antitrust immunity to the agreement in 
Docket 48831 and to those portions of the agreement in Docket 49596, 
set forth in finding paragraphs 1 and 2 above, subject to the 
conditions imposed therein;
    2. We disapprove that portion of the agreement in Docket 49596 
set forth in finding paragraph 3, above; and
    3. We attach the following condition to our approval in Order 
94-7-17 of the amendments to paragraphs 8/8.1 and 8.2 of Resolution 
600b (II) in Docket 49595: The references to intermediate stopping 
places in paragraphs 8/8.1 and 8.2 of Resolution 600b (II) do not 
constitute an ``agreed stopping place'' for purposes of jurisdiction 
under Article 1(2) of the Warsaw Convention;
    4. We defer action on paragraph 3 of Resolution 600b, set forth 
in R-1 of the agreement in Docket 49596, until such time as IATA 
amends paragraph 4.2 of the same resolution to assure shippers of 
the same right to declare excess value when the Warsaw Convention is 
not applicable as when it is applicable; and
    5. We will publish this order in the Federal Register.

    By:
Patrick V. Murphy,
Acting Assistant Secretary for Aviation and International Affairs.
[FR Doc. 95-17827 Filed 7-20-95; 8:45 am]
BILLING CODE 4910-62-P