GKN Westland Helicopters Ltd & Anor v Korean Air

The Warsaw Convention provides an exclusive framework for claims arising from international carriage by air. Domestic procedural rules must not produce a result inconsistent with its express provisions. The costs exception in Article 22(4) applies only where the carrier’s written offer satisfies the Convention’s timing and amount requirements. A payment into court accepted by the claimant may constitute an award of damages for this purpose, so that a qualifying offer can deprive the claimant of costs. However, where the offer was made outside the specified period or the payment into court exceeded the offer, the exception does not apply and the ordinary procedural costs rules remain effective.

The claimants sought compensation from Korean Air for cargo destroyed in an aircraft accident. Liability was governed by the Warsaw Convention, as amended at The Hague and incorporated into English law. The claimants accepted payments into court calculated by reference to the Convention limits, but disputed the defendant’s contention that Article 22(4) deprived them of costs.

The defendant applied for an order that the claimants recover no costs and pay the defendant’s costs. The central issues were whether Article 22(4) applied where proceedings ended by acceptance of a payment into court, whether the Convention prevailed over CPR Part 36, and whether the offers and payments satisfied the Convention’s conditions.

1. The application was dismissed. The claimants were entitled to their costs under the ordinary procedural rules.
2. The Warsaw Convention provides an exclusive legal framework for disputes arising from international carriage by air. Its language must be construed broadly and uniformly, without treating English domestic precedent or technical domestic rules as controlling. The rights and remedies available under the Convention are exclusive, as reflected in [2002] AC 628.
3. Article 22(4) contains a specific exception to the general power to award litigation costs. It applies only where the amount of damages awarded does not exceed a written offer made within six months of the occurrence or before commencement of the action, if later.
4. Neither condition was satisfied. The July 2000 offer was made more than six months after the accident and more than six months before proceedings began. The later November 2001 offer was lower than the payments subsequently made into court. The claimants therefore did not fall within the Article 22(4) exception.
5. As an alternative and obiter conclusion, acceptance of a payment into court can amount to an award of damages for Article 22(4) purposes. The procedural effect of payment and acceptance terminates the litigation in a manner equivalent to judgment. If the defendant had made a qualifying offer no less than the payment into court, the court would have deprived the claimants of their costs.
6. Domestic procedural rules cannot be applied to produce a result contrary to the Convention. That principle is illustrated by Milor S.r.l. v British Airways Plc [1996] QB 702. Since Article 22(4) did not apply on these facts, there was no conflict and CPR Part 36 continued to operate.
7. The claimants’ costs were to be assessed on the standard basis. The judge observed that the claims should have been brought in the County Court and regarded the commencement of unlimited claims as speculative.