Update on Aviation Litigation Cases in Panama

The following is an update of some important aviation litigation cases in Panama that we are handling.

CAISA v KLM

Amicus Curiae filed by IATA, Lufthansa, United, COPA, LAN

Back in 2013, CAISA, a Panama pig breeding company filed a civil claim against KLM due to apparent damages caused by the loss of cargo, shipped from Ireland to Panama.

Once concluded the mandatory evidence phase of this case, the Eleventh District Court in Panama, rendered a judgment disregarding the applicability of the Montreal Convention of 1999, properly ratified by Panama, which establishes the principle of limitation of liability and thus the court ruled in favor of the pig breeding company under arguments of “equity”, not supported by our legal system.

Due to the potential negative precedent that this judgment might bring to Panama, Pardini & Asociados acting on behalf of IATA, United, LAN, Lufthansa, COPA, filed separate Amicus Curiae motions as well as Appeal motions to request the Court of Appeals of Panama the reversal of this judgment and the recognition of the validity and application of the Montreal Treaty.

We briefly outline some of the arguments submitted before the Court including without limitation the following -

• That the nature of the conflict that initiated the CAISA v KLM case is a contractual dispute, produced within a valid international air transport agreement that complies with every single requirement established under Panama law to be considered as valid contract
• That Panama aviation law establishes that international air transport contracts will be ruled by the international treaties and the terms set on the agreement by the parties.
• That the international treaty that governs this type of agreements is the Montreal Convention of 1999.
• That the Montreal Convention is ratified by Panama Law No. 31 of 2002, and therefore it is the statute applicable to an international air transport contract that has Panama as destination of the cargo.
• That the Judicial Code of Panama establishes the obligation that all courts have to decide a legal conflict under the terms of Panamanian law.
• That a judgment rendered by a District Court in equity is not valid under Panamanian law.

This principle of limitation of liability is properly embedded in the Montreal Convention of 1999 and ratified by the Republic of Panama through the Law No. 31 of 2002. It recognizes the limit of responsibility to which an air transportation company is subject to in cases of accidents producing damages or loss to cargo

Once all individual Amicus motions and appeals were filed, the First Court of Appeals of Panama is currently reviewing the file including arguments and evidence practiced along the case to then issue judgment

VIGOJET SA and others v. GIRAG PANAMA, S.A.

Airplane Ground Casualty

Back in 2008, our client Girag Panama, S.A. (defendant), an airplane ground services company, received notice of an ongoing civil action filed against them by a cargo company whose cargo plane was damaged on the outside of our client´s hangar in the process of leaving the installations after receiving service.

The accident occurred at the very end of the service process, while the crew of the airplane conducted their procedure to remove the airplane from the defendant´s installations. The airplane suffered mostly hull damages.

The claimant argued in his claim that defendant´s assistance procedure was negligently conducted, causing the aircraft to lose control and the consequent damages when the airplane hit part of the hangar structure.

Evidence showed that the pilot and his crew did not manage the hand signals provided by defendant ground personnel nor the plane safety procedures protocols properly.

After a long reviewing process, the Fourth Civil Judge of the District of Panama, the parties received a judgment favoring the defendant, based on our representation arguments and evidence that clarified that the accident was caused directly by the irresponsibility of the plane crew due to the breach of the takeoff procedure protocols applicable to that exact plane.

The claimant submitted an appeals motion, supported with a petition for a second phase of evidence before the First Court of Appeals.

Currently, the First Court of Appeals of Panama is reviewing the file, evidence and arguments of both parties to render a final judgment on this case.

The Girag decision will become of relevance in the Panama aviation jurisprudence as it is the first case where shared liability is being discussed.

ACODECO v United Airlines and others

Antitrust Litigation

The Panama Authority for Consumer Protection and Defense of Free Competition (also known by the acronym ACODECO), back in 2001, initiated an Antitrust action against international airlines including American, Delta, COPA and Continental Airlines (now United Airlines) based on a supposed violation of Panama antitrust Laws due to a common practice of travel agencies of charging a percentage to the airlines in connection with the purchase of tickets. Pardini & Asociados has been acting as legal counsel for United Airlines.

It was not until 2015 that the Ninth District Court of Panama issued a judgment in favor of the arguments proposed by Pardini & Asociados based on an Exception filed at the main hearing, in which it was sustained that the hierarchical application of the Open Skies Treaty, entered into between United States and Panama, duly ratified by Panama in 1998, should prevail over any other provisions of Panama law.

ACODECO submitted an appeal before the Third Court of Appeals of Panama, which is the competent authority to know of this type of cases, supported by opposing arguments against Pardini & Asociados admitted “Exception of International Rights through the Treaty between Panama and the United States of America, ratified through Law No. 63 of October 15, 1998”, and requesting this Court to admit their initial petitions.

Once again, acting on behalf of our client, Pardini & Asociados, submitted before the Court of Appeal, our opposing arguments, against ACODECO´s appeal in order to support our previously mentioned Exception, requesting the Third Court of Appeals to confirm the initial judgment rendered by the Ninth Court.

Due to the complexity of this case, the Third Court of Appeals has not yet ruled over this case. They are still reviewing the documentation rendered along with the claim and our opposing motion as well as the evidence practiced on the first instance of the case.  Once this phase is concluded, the Third Court of Appeals should issue its judgment over this case.

For further advice or information, please contact

Juan F. Pardini                     pardini@padela.com

Juan J. Espino                      jjes@padela.com