Brazil has long been an outlier in terms of global aviation standards and regulations.

The roots of the problem go back to the 1990s when the Brazilian Supreme Court found that the provisions of the Warsaw Convention had been superseded by the Brazilian Consumer Code. It meant Brazilian courts applied the national regulation—which is far more beneficial to consumers—to resolve disputes between airlines and passengers.

Ricardo Bernardi, Partner and Aviation Specialist at law firm, Bernardi and Schnapp, says this led to several cases that significantly expanded airlines’ liability in a way not foreseen in the international laws.

“Such interpretations include the concept of presumed moral damage (in re ipsa) with a punitive component, applicable in events of baggage loss or delays as well as flight delays or cancellations, even if caused by force majeure or aviation safety,” he says. “Therefore, passengers commonly seek indemnification from airlines regardless of the reason for the flight delay or cancellation and without the need to demonstrate or produce any evidence of loss or damage.”

 

Limited liability

There have been developments in recent years. In 2017, for example, it was decided that the Montreal Convention prevails over the provisions of the Consumer Code.

And following IATA efforts, supported by the Civil Aviation Secretariat (SAC) and the Nacional Civil Aviation Agency (ANAC), legislation was passed at the Brazilian Congress in 2020 that has limited airlines’ liability for flight delays out of their control and shifted the emphasis on claims for moral damages.

In line with Article 19 of the Montreal Convention, airlines now cannot be held liable if delays result from the following circumstances:

  • Landing or takeoff restrictions imposed by air traffic control authorities resulting from meteorological adverse conditions
  • Landing or takeoff restrictions resulting from lack of airport infrastructure
  • Restrictions for flights, landing, and takeoffs determined by civil aviation authorities or other governmental authorities
  • Declaration of pandemic status or publication of rulings resulting therefrom, aiming at prohibiting or restricting air carriage services or airport operations.

In addition, to claim moral damage passengers must now produce evidence.

But Bernardi warns that continued efforts are required to make sure the new law and the Montreal Convention are properly interpreted and enforced. “Several recent decisions issued by Courts are still adverse to airlines,” he says.

 

Judicial commodity

Indeed, in Brazil litigation against airlines has become a “judicial commodity.” Essentially, opportunistic companies started to foster litigation by purchasing indemnity rights from passengers and suing airlines for a profit or engaging in association with plaintiffs to sue and get a piece of the compensation.

The scale of the problem can clearly be seen in the figures. Taking three major airlines headquartered in the United States that also operate in Brazil, in 2019 the United States saw approximately one lawsuit for every 1.25 million passengers. In Brazil, there was one lawsuit for every 227 passengers. In fact, in 2019 Brazilian aviation litigation grew a whopping 141%.

And while Bernardi accepts “some progress” has been made since those figures—largely due to the new 2020 legislation—he points out that the overall situation is still extremely detrimental to Brazilian aviation.

“It creates barriers for the entry of new airlines, preventing an increase in competition, which would benefit consumers,” he says. “It also increases ticket fares caused by reduced competition and the costs resulting from the high volume of litigation and compensations awarded. This underdevelopment of the industry means the loss of job opportunities.”

Bernardi concludes that it is crucial to continue with efforts to explain to Brazilian courts the importance of applying the rules and principles established by international treaties and to show the harmful effects of enforcing local laws, which were not designed to regulate liability in air travel.

“This must be seen as a long term and constant effort which, if pursued with consistency and based on the correct legal grounds, will bring harmonization of the system and create new opportunities for development of air carriage in Brazil, to the benefit of airlines, passengers, and the community as a whole,” he says.

 

Credit | Arthur Matsuo / Shutterstock
Top