Malaysia Airlines flight 370

Malaysia Airlines set to seek out-of-court deals on claims, say lawyers

Although no wreckage has been found to even confirm a crash, experts say burden of proof is on carrier, which will want to lay matter to rest

PUBLISHED : Monday, 12 May, 2014, 3:05am
UPDATED : Monday, 12 May, 2014, 11:25am

The lack of evidence indicating what caused flight MH370's disappearance raises a legal conundrum that aviation law experts say is likely to force Malaysia Airlines into out-of-court settlements with angry next-of-kin.

More than two months since MH370 disappeared, no wreckage has been found to even confirm a crash, let alone apportion blame.

However, relatives of the 239 people on board, mostly Chinese, can still pursue Malaysia Airlines because under international aviation law it is an airline's responsibility to prove it was not to blame for an accident.

"On the surface, [Malaysia Airlines] is responsible," said Jeremy Joseph, a Malaysian lawyer specialising in transport cases.

The "burden of proof" rested on the carrier to clear its name, he added.

Under International Civil Aviation Organisation rules, next-of-kin in a plane crash are entitled to an automatic minimum of about US$175,000 per passenger, regardless of fault, payable by an airline's insurance company.

But Malaysia Airlines is also vulnerable to civil lawsuits for potentially greater damages by hundreds of relatives already infuriated over the lack of information on the case.

The Beijing-bound plane disappeared on March 8 and is believed to have crashed in the Indian Ocean. Theories on what happened include a terror act, rogue pilot action, or mechanical problems.

No significant legal moves have yet been made as families monitor an immensely difficult search in vast ocean depths that has so far found nothing.

Malaysia Airlines has begun making some payouts to families under an "advance compensation process" but has declined to reveal details.

"When there is no cause identified, it is hard to see how the airline has or has not shown the absence of fault," said Alan Tan, a professor of aviation law at the National University of Singapore.

The size of any damages would depend on where lawsuits were filed.

Next-of-kin can file in the country where an airline is based, where tickets were purchased, where the passengers were headed or where they lived.

Since most passengers were from China or Malaysia, most cases could be filed in the two countries, where courts are more conservative in awarding damages than in countries such as the United States.

Damages are typically based on the lost lifetime earnings of a victim and thus could total in the hundreds of millions for all passengers combined.

"In the US, settlements usually are in the US$1 million-US$3 million range. For Malaysians or Chinese, salaries are lower, and hence, recoveries will be lower," said Paul Stephen Dempsey, director of the Institute of Air and Space Law at Canada's McGill University.

A US law firm is already planning a "multimillion-dollar" lawsuit against Malaysia Airlines and aircraft maker Boeing, on behalf of an Indonesian passenger's family.

But legal experts said few cases were likely to end up in court. They expect undisclosed, out-of-court settlements between families and Malaysia Airlines and its lead insurer, German giant Allianz.

This would allow the loss-making carrier, which was struggling under intense competition even before MH370 disappeared, to quietly lay the matter to rest and focus on rebuilding its image.

"Because of its unprecedented nature, the courts are going to look at [MH370] very carefully. That is something the airline will try to avoid unless settlement expectations from the victims families are perceived by Malaysia Airlines as unreasonable," Joseph said.

Tan said: "This avoids court uncertainties and protracted litigation, and most claims will end up being negotiated and settled this way, particularly those outside the US."

In the case of Air France flight 447, which crashed in the Atlantic with 228 people aboard in June 2009, the airline's insurers made private compensation payments to relatives.