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[Date:01.08.2001] [Finding place]  [back] [next]
 
  THE GLOBAL LAWYER U.S. - Style Concorde Payouts Break New Ground
 
  Lee Dembart International Herald Tribune Wednesday, August 1, 2001

PARIS The multimillion-dollar settlements paid to the families of the victims of the Air France Concorde crash outside Paris represent a level of compensation unknown in Europe until now and give new impetus to the spread of American-style legal damages around the world, lawyers and legal analysts say.

Because the plane was bound for New York, the families of the 100 passengers who died in the crash on July 25, 2000, threatened to sue in the United States - where the case would be heard by a jury. As a result, they were able to recover far more money than they would have in Europe.

The American legal system compensates for losses including pain and suffering; the loss of the love, affection, companionship, comfort and guidance of family members, and the lost income of the victims. These losses are not recoverable in many European countries, or the amount of recovery is limited, according to knowledgeable authorities.

Secrecy agreements cloak the actual amounts paid to individual family members, but Air France's insurance company, La Reunion Aerienne, has said that the total paid to nearly 700 relatives would be 337 million Deutsche marks (about $150 million), an average of $1.5 million per passenger.

This is about half of the average paid to the families of air crash victims in the United States, but it is astronomically more than the amount typically paid to people killed in crashes in Germany, where the only recoverable loss under the law is the cost of burial, "maybe 10,000 or 20,000 Deutsche marks," according to Christof Wellens, a lawyer in Moenchengladbach, Germany, who represented the families of 22 of the Concorde passengers.

The Concorde settlement is the latest in a series of such cases that have included oil-rig disasters, the conduct of Swiss banks and German companies during World War II, oil spills and some other air crashes. "You are seeing the globalization of American notions of tort liability, Anne-Marie Slaughter, a professor of international, foreign and comparative law at Harvard Law School, said by telephone from Cambridge, Massachusetts.

She said that the Concorde settlement was "less than a U.S. verdict would have been, but it's greater than what Germany gets, and that will ultimately probably change German practices."

Gary Born, an American lawyer in London who is the author of "International Civil Litigation in United States Courts," the leading casebook on this subject, said:

"There has been over the last decade a continuing expansion of U.S. jurisdiction and substantive rules in tort contexts. There is a very real possibility that one can see in purely internal European or Middle Eastern or African transactions or accidents the possibility of U.S. courts at least attempting to set down standards. That could include an intra-European, or intra-German flight - Hamburg to Berlin, for that matter."

And Gerard Forlin, a practicing barrister in London who has been involved in litigating many accident cases, said, "The perceived threat of the spread of Americana is seriously ratcheting up the damages more than the legal regime would normally allow. What the Europeans don't want is an Americana jamboree, where the damages are too high."

Up to now, European courts have been reluctant to adopt American standards of tort liability, and Europeans in general have regarded multimillion-dollar damage awards by American juries with amazement and disbelief. Even in France, which recognizes some "loss of companionship" damages for relatives of people killed in accidents, the awards are typically about one-tenth of what they are in the United States, experts said.

By comparison with the Concorde crash, the families of the 101 people who died in Germany's worst train disaster, in Eschede in 1998, have each received 30,000 DM from Deutsche Bahn, the German railroad, which refuses to pay more. Some of the families have filed suit.

The Concorde settlement is being described as mid-Atlantic, "which is not Ellis Island, which is not Cherbourg harbor, but somewhere in between," said Ulrich von Jeinsen, a lawyer in Hannover who represented the families of 10 passengers who died in the crash of the supersonic jetliner.

In Germany, the government has resisted all efforts to liberalize the damage-award system, Mr. von Jeinsen said, arguing that it is immoral for people to get a financial benefit from someone else's death.

At the same time, however, West European countries have typically had a much broader and more generous system of social security than exists in the United States to care for people in need.

But "governments are economizing on all of these systems," said Hans van Loon, secretary-general of the Hague Conference on Private International Law, "and to the extent that they do, they make openings toward initiatives to look for compensation elsewhere."

"If the trend goes on," he said, "it's unavoidable that we will see" American-style tort damages in Europe.

Ms. Slaughter of Harvard agreed. "The German system cannot remain closed," she said. "It's got to accommodate the possibility of much larger judgments elsewhere."

In the Concorde case, which was settled with all of the passengers' families just before the first anniversary of the crash last week, knowledgeable observers agree that unique circumstances pushed Air France and the other defendants to reach a record European settlement.

In the first place, there was the very real threat of being hauled before an American jury and facing unlimited liability, potentially much higher than the defendants agreed to pay.

In addition, this was a very high profile crash involving the world's most prestigious airliner, a symbol of national pride, and one of the world's main flag carriers. Air France, which is preparing to put the plane back in service, does not want extended litigation, with the broad discovery that is available in the American legal system and the resulting drumbeat of bad publicity that would have gone on for years. It was worth it to the airline to settle with the families and put the case behind it.

Air France did not respond to repeated requests to discuss the Concorde settlement.

The Warsaw Convention, which covers airline liability in crashes, would have allowed the case to get into an American court because the passengers, almost all of whom were German, were flying to New York, where they were to board a cruise ship for a holiday voyage. They were going to fly back to Germany on a different airline. Because the ultimate destination of their tickets was New York, the U.S. courts could have exercised personal jurisdiction in the case.

The defendants would then have argued what is called "forum non conveniens" - that there was a better place to try this case. After all, the accident occurred in Paris, all of the evidence is in Paris, it was a French airline flying an airliner built in Europe, and almost all of the passengers were German. What does this have to do with an American court and an American jury?
.
But the plaintiffs would have responded that there were defendants other than Air France. There was also Continental Airlines, an American carrier, whose airplane had dropped a piece of metal on the runway a few minutes before the Concorde's takeoff roll, and Goodyear Tire Rubber, also an American company, which made the tire that exploded on hitting the piece of metal, sending an 8-kilogram (17.6-pound) chunk of rubber into the right wing, rupturing the fuel tank and starting the fire that doomed the plane.

The plaintiffs would have argued that an American court would be the only place where all of these defendants could be joined in one place and in one proceeding. Otherwise there would have been a series of tag-team lawsuits around the world, which would not further the ends of justice.

"Forum non conveniens" sometimes works, as it did in the Bhopal gas disaster litigation in the mid-1980s, which an American court sent back to India for adjudication, even though Union Carbide, an American company, was a defendant. But "forum non conveniens" is a "highly discretionary doctrine" and "the defendants can't have confidence at the outset that they will win on that," said Mr. Born, the casebook author.

In any event, the debate over the forum alone would probably have taken two years, the experts agreed.

In the Concorde case, Mr. Born suggested, the European companies made decisions based on litigation immediately before them, while neglecting the long-term consequences of those decisions.

"Because of fear of liability," he said, the Concorde case "ends up being decided through a private settlement without European concerns being articulated particularly well."

But Mr. Forlin, the London barrister, thought that the "mid-Atlantic" resolution of the Concorde case served the ends of justice pretty well.

"The damages in Europe are too low," he said. "The damage regime in America wouldn't work here, and my natural instinct is that the damages should be about halfway. Maybe Concorde fits that bill."

This is the first article in a new feature on international legal issues that will appear periodically. Lee Dembart holds a law degree from Stanford Law School.
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