Sides Battle Over Limits To Crash Compensation

Just a few days after Vnukovo Airlines said it would pay up to $20,000 each to the families of the 141 victims of the Aug. 29 crash on Norway's Spitsbergen Island, the stakes have been raised in the battle over compensation.

A suit for compensation on behalf of one family -- with four more soon to be added -- went to court Monday in Troms?, Norway. Named in the suit are Vnukovo, Arktikugol -- the mining company that chartered the flight -- and their insurance companies. Since the compensation ceiling in Norway is $140,000, the families could gain a great deal more than Vnukovo cares to part with.

The case begins amid allegations by two families that Vnukovo indicated to them it would pay $20,000, but only in monthly installments. Tim Unmack of Beaumont and Sons, a solicitors' firm in London taking part in the representation of both Vnukovo and its insurance brokers, Willis Corroon Aerospace, said that the question of installment payments was being looked into, and that Russian law was "fairly complex" on such matters.

The case can take place in Norway because, according to the Warsaw Convention of 1929, those seeking compensation can turn to courts either in the country of the flight's origin or the country of the flight's destination.

Separating the two sides are radically different interpretations of the Warsaw Convention's provisions for compensation. Gunnar Nerdrum, the Norwegian lawyer for the five families, says that the convention as originally written provided for compensation for international accidents in gold francs, a theoretical currency.

In accordance with the Chicago Convention of 1955, he said, the theoretical currency was changed to Special Drawing Rights, or SDRs, and the compensation ceiling was set at 100,000 such units. Today the value of 100,000 SDRs is $140,000.

In 1993, Norwegian law, applying to all air traffic in Norwegian air-space, was amended to bring the country's internal compensation regulations in line with the two international conventions, so that any accident over Norwegian soil, be the flight domestic or international, calls for up to 100,000 SDRs in compensation. Russian internal law has no such provision.

Vnukovo Airlines has argued that the Warsaw Convention sets the compensation ceiling at $20,000, and that Norwegian internal law cannot supercede international law on an international flight. Nerdrum counters that while the $20,000 limit for compensation may be lawful for an internal Russian flight, for which the convention does not apply, an international flight necessitates the convention's 100,000 SDR figure take precedence.

Unmack of the Vnukovo team says that the 100,000 SDR figure has never become a part of international law.

"There have been various attempts that have fallen on their face to increase liability by means of international law," he said.

Vnukovo's lawyer, Joseph Gibcot, said airlines from some wealthy nations have, since the Warsaw Convention, signed on to agreements to pay more than the $20,000 -- in his view -- limit set by the convention. "But that," he said, "is their business." Vnukovo, he added, has not signed such an agreement, and therefore it is not responsible for higher limits set by those countries whose airlines did sign. Russia has signed only the Warsaw Convention, and Vnukovo therefore is responsible only for that convention's provisions, he concluded.

Unmack concurred. "The Warsaw Convention is the international treaty that has to be followed unless there's a specific agreement, and there hasn't been any specific agreement."

The case in Norway is expected to last for six months, so the lawyers will have an ample amount of time to argue.

"We have a Russian proverb," Gibcot said. "Two lawyers -- three opinions."