You are here: Home Articles Liability Insurance of Air Carrier and Air Freight Forwarder
Decrease font size  Default font size  Increase font size 
Liability Insurance of Air Carrier and Air Freight Forwarder Print E-mail


Thailand has recently issued new laws to impose obligation to procure liability insurance on the air carriers, namely, (i) the Air Navigation Act (No. 14), B.E. 2562 (A.D. 2019) which was issued with immediate effect on 26 May 2019 and (ii) the Ministerial Regulation on Liability Insurance of the Carrier Engaging in Carriage by Air, B.E. 2562 (A.D. 2019) which came into effect on 27 July 2019.

There are two sections of the Air Navigation Act (No. 14) relating to foreign airlines operating air carriage into or out of Thailand, i.e. Section 41/126 and Section 41/132.

According to Section 41/126 of the Act (No. 14), any foreign air operator who will operate commercial air carriage either into or out of the Kingdom must obtain air carriage operating license issued by the Civil Aviation Organization of its home country that has entered into an agreement on air carriage with Thailand and must also obtain permission from the Director-General of the Civil Aviation Authority of Thailand (“CAAT”) while Section 41/132 of the Act (No. 14) provides that the foreign air operator who has received approval under Section 41/126 must procure insurance for contractual liability and third party’s damages arising out of air accident caused by aircraft. The sum insured for the liability policy must not be less than that prescribed by the International Carriage by Air Act (“the ICAA”).

The Ministerial Regulation B.E. 2562 was issued to impose an obligation on airlines and freight forwarders to procure liability insurance to cover all liability under the ICAA.

As per Article 2 of the Ministerial Regulation B.E. 2562, the carrier is required to have a liability insurance with a time policy covering the following damages:

(1)  in the case of carriage of passengers and baggage, the insurance shall cover death and personal injury caused by accidents and for loss or destruction of or damage to baggage or delay in the carriage by air of passengers or baggage;
(2)  in the case of carriage of cargo, the insurance shall cover loss or destruction of or damage to cargo or delay in the carriage by air of cargo;
(3)  in the case of carriage of passengers, baggage and cargo, the insurance shall cover damages stated in (1) and (2).

Article 3 of the Ministerial Regulation B.E. 2562 provides that the minimum insurance for the carrier’s liability in the time policy pursuant to Article 2 shall not be less than the limits of liability prescribed by the ICAA. In case the carrier is a freight forwarder issuing house air waybill, the minimum insurance for the carrier’s liability in the time policy pursuant to Article 2 shall not be less than 10 million baht.

A question arising under the new Ministerial Regulation is whether or not the new Ministerial Regulation applies to Thai airlines only or to foreign airlines as well.  There is a remark at the end of the new Ministerial Regulation which reads:

Remark:  The reason for issuing this Ministerial Regulation is because Section 6 paragraph two of the International Carriage by Air Act, B.E. 2558 provides for the carrier, who operates carriage by air within, into or out of the Kingdom, to procure insurance for carrier’s liability pursuant to this Act.”

The operator who operates carriage by air within Thailand is clearly meant to be domestic air carrier.  However, the term “into or out of the Kingdom” seems to suggest that this Ministerial Regulation should include foreign airlines.  

There is no doubt that both ICAA (as Thai law) and MC99 impose liability on air carriers for delay. The point is whether or not foreign airlines under Section 41/126 of the Act (No. 14) must procure liability insurance to cover its liability for delay pursuant to the ICAA.

Although the Act (No. 14) is silent on this issue, the provisions of the new Ministerial Regulation seem to suggest that the foreign airlines who operate carriage by air into or out of Thailand and are considered “the carrier” under the ICAA must have liability insurance for delay.

 

Download Article

 

  

[050819]