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Standard Ground Standard Ground Handling AgreementHandling Agreement

LAURA PIERALLINILAURA PIERALLINI

STUDIO LEGALE STUDIO LEGALE

PIERALLINI E ASSOCIATIPIERALLINI E ASSOCIATI

WWW.STUDIOPIERALLINI.ITWWW.STUDIOPIERALLINI.IT

IATA Legal Symposium 2012IATA Legal Symposium 20125 – 7 February 20125 – 7 February 2012

Shanghai ChinaShanghai China

IATA Legal Symposium 2012 – Shanghai China - 5/7 Febraury 2012IATA Legal Symposium 2012 – Shanghai China - 5/7 Febraury 2012

The IATA Standard Ground Handling Agreement: an overview

The IATA SGHA provides general terms and conditions for optional use of air carriers and handlers.

The Aviation Ground Services Agreements Working Group (AGSA WG) publishes new versions of the SGHA every 5 years following detailed reviews.

The 2008 version of the SGHA in force, as published in the IATA Airport Handling Manual (AHM), is currently under review.

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The IATA SGHA current main issues

There is a debate whether and, possibly, to what extent some provisions contained in the SGHA could be changed.

There is growing concerns among airlines and airlines associations of different jurisdictions about the interpretation of art. 8 of the SGHA, which provides for aircraft damage from ground handling.

In Italy, the situation is not clear due to the stance taken by some important insurance companies, according to which art. 8 of the SGHA provides for a total exclusion of responsibility for damages caused by handlers to air carriers. Moreover, to make things even worse, two different courts gave two opposite interpretations on that provision, especially as regards the exclusion of responsibility (as we will summarize better infra).

This is a clearly distort interpretation of art. 8, which may lead air carriers damaged to bear unreasonable (economic) consequences.




The provisions of Article 8 of the SGHAThe provisions of Article 8 of the SGHA

Article 8.1Article 8.1 provides for the general principle on legal liability of provides for the general principle on legal liability of handlers; handlers;

Article 8.2Article 8.2 sets down the exclusion of responsibility in respect of sets down the exclusion of responsibility in respect of

damage, death, delay, injury or loss to third parties caused by damage, death, delay, injury or loss to third parties caused by handlers and air carriers; handlers and air carriers;

Article 8.3Article 8.3 concerns the exclusion of responsibility with regard to concerns the exclusion of responsibility with regard to damages caused by handlers occurred in the phase of loading and damages caused by handlers occurred in the phase of loading and unloading;unloading;




Article 8.4 refers to the specular exclusion of responsibility of air carriers with respect to damages caused to employees or goods of handlers;

Article 8.5 sets down the exception to that general principle as set forth in article 8.1;

Article 8.6 concerns specifically cargo, and provides for the principle according to which handlers shall indemnify the Carrier against direct loss of or damage to the Carrier’s cargo (excluding Mail) caused by the negligent act or omission by or on behalf of the handlers in the provision of the services and/or the supply of goods under this Agreement provided the limitation indicated therein.STUDIO LEGALE STUDIO LEGALE

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Articles 8.1 and 8.5 of the SGHA

Article 8.1 states that

Carrier shall not make any claim against the Handling Company and shall indemnify it (subject as hereinafter provided) against any legal liability for claims or suits, including costs and expenses incidental thereto, inrespect of, inter alia: […] (d) damage to or loss of property owned or operated by, or on behalf of, the Carrier and any consequential loss or damage; arising from an act or omission of the Handling Company in the performance of this Agreement unless done with intent to cause damage, death, delay, injury or loss or recklessly and with the knowledge that damage, death, delay, injury or loss would probably result.




Article 8.5 states thatNotwithstanding Sub-Article 8.1(d), the Handling Company shall indemnify the Carrier against any physical loss of or damage to the Carrier’s Aircraft caused by the Handling Company’s negligent act or omission PROVIDED ALWAYS THAT the Handling Company’s liability shall be limited to any such loss of or damage to the Carrier’s Aircraft in an amount not exceeding the level of deductible under the Carrier’s Hull All Risk Policy which shall not, in any event, exceed USD 1,500,000 except that loss or damage in respect of any incident below USD 3,000 shall not be indemnified. For the avoidance of doubt, save as expressly stated, this Sub-Article 8.5 does not affect or prejudice the generality of the provisions of Sub-Article 8.1 including the principle that the Carrier shall not make any claim against the Handling Company and shall indemnify it against any liability in respect of any and all consequential loss or damage howsoever arising.




The interpretation of articles 8.1(d) and art. 8.5 of the SGHA in the Italian Case- Law

Italian airport managers and the leading insurance company allege that - pursuant to articles 8.1 and 8.5 of the SGHA - air carriers would have waived in advance to any and all actions of civil liabilities, in contract or in tort, against handlers damaging aircraft during the performance of ground operations.

Such interpretation, according to Italian airport managers and insurance companies, should be grounded on the allegation that air carriers do generally cause damages to airport facilities, such as apron or airport ramps as a consequence of “heavy” landings or landings without landing gear(!) and fingers when approaching the airport station.

The damages allegedly suffered by airport managers would also include costs for handling passengers’ claims related to damaged and/or lost baggage.




As far as the matter above, two judgments have been recently issued: one As far as the matter above, two judgments have been recently issued: one by theby the

Civil Court of Bari and the other by the Civil Court of Verona.Civil Court of Bari and the other by the Civil Court of Verona.

The Civil Court of Bari, accepting the interpretation of the airport managerThe Civil Court of Bari, accepting the interpretation of the airport managerinvolved as defendant in such proceedings, deemed as applicable the involved as defendant in such proceedings, deemed as applicable the

invokedinvokedlimitation/exclusion of liabilitylimitation/exclusion of liability

The Civil Court of Verona, on the contrary, resolved not to apply any The Civil Court of Verona, on the contrary, resolved not to apply any exclusion ofexclusion of

liability and stated the airport manager being liable as a consequence of its liability and stated the airport manager being liable as a consequence of its grossgross

negligence in performing handling services which caused damages to thenegligence in performing handling services which caused damages to theplaintiff’s aircraft.plaintiff’s aircraft.




The interpretation of art. 8 in other The interpretation of art. 8 in other jurisdictionsjurisdictions

In most jurisdictions, the SGHA ensures that any determination of damage to aircraft isIn most jurisdictions, the SGHA ensures that any determination of damage to aircraft isdetermined by “contract principles” and not by “tort principles.” determined by “contract principles” and not by “tort principles.”

In In civil law systemscivil law systems, it is not sufficient that contractual damages be the immediate and, it is not sufficient that contractual damages be the immediate anddirect consequence of the non-performance; they must have been foreseen or foreseeable direct consequence of the non-performance; they must have been foreseen or foreseeable

atatthe time that the obligation was contracted unless there is intentional or gross fault. the time that the obligation was contracted unless there is intentional or gross fault.

Such a provision is set forth in the French legal system (art. 1150 code civil), in the Such a provision is set forth in the French legal system (art. 1150 code civil), in the QuébecQuébec

code civil (art. 1613 C.C.Q.), in the Louisiana civil code (art. 1996), in the Italian codicecode civil (art. 1613 C.C.Q.), in the Louisiana civil code (art. 1996), in the Italian codicecivile (art. 1225). civile (art. 1225).

An interesting case was tackled in the An interesting case was tackled in the US jurisdictionUS jurisdiction. The case can be summarized. The case can be summarizedasfollow.asfollow.




On January 10, 2005, North American Airlines, Inc. (NAA) filed a complaint against VirginAtlantic (Virgin) in the state of New York, claiming liability under common law andstatutory theories of negligence for damages to the NAA aircraft as well as forconsequential damages suffered by NAA. Both Aircraft Service International, Inc. (ASI) and Virgin were signatories to a StandardGround Handling Agreement. NAA argued that Virgin was liable for all of NAA’s damagesresulting from a collision under principles of common law negligence.

NAA contended that ASI and Mach II Maintenance Corporation, (Mach II) were Virgin’sagents, so Virgin is vicariously liable for the damages they caused.

Here, the Court found that ASI was in some measure responsible for the collision with theNAA aircraft and is contractually obligated to indemnify Virgin against damage to Virginaircraft that resulted from ASI’s negligent operation of the ground support equipment andthus liable for the actual costs incurred by the damage. However, the court found that ASIis not liable for consequential damages suffered by Virgin, since the same contractforecloses that result unless the damages were caused intentionally or recklessly. (N. Am.Airlines, Inc. v. Virgin Atl. Airways,Ltd., 2006 U.S. Dist. LEXIS 92814.)




Final remarks and possible action to be takenFinal remarks and possible action to be taken

To conclude, though internationally some associations, like the AirportServices Association (ASA), argues that the 2008 IATA SGHA should remainunchanged in the 2013 edition of the SGHA, because any changes to article 8 ofthe SGHA would be counterproductive we can uphold that art. 8 should bechanged to make it clearer, especially as concerns a better coordination betweenthe general principle as set down under its paragraph 1(d) and the exception to itas provided for under its paragraph 5. 5.



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