MH17 compensation could hit $1 billion in latest disaster for Malaysia Airlines

GRIEVING families could be eligible for potentially millions of dollars in compensation over the latest disaster to hit troubled Malaysia Airlines.

21 July 2014. The Grabovo main crash site of flight MH17 is today left deserted. Pic Ella Pellegrini

GRIEVING families could be eligible for potentially millions of dollars in compensation over the latest disaster to hit Malaysia Airlines.

A top aviation lawyer says the carrier’s liability over the MH17 disaster could reach $1 billion and victims’ families have strong legal grounds to seek damages.

The tragedy was the latest incident in a horror year for the troubled airline, after MH370 dramatically disappeared on March 8 with 227 passengers and 12 crew members on-board.

International aviation accident attorney Floyd Wisner told news.com.au that Malaysia Airlines would struggle to prove it wasn’t negligent over MH17, which was shot down over rebel-held Ukraine last Thursday with 298 people on board.

He said the families of the 38 Australian victims could seek financial compensation from Malaysia Airlines under the 1999 Montreal Convention.

Mr Wisner, who has represented passengers and families in major aviation incidents for more than two decades, including the September 11 terror attacks, warned claims could take years to resolve.

“Malaysia Airlines will be liable unless it can prove it took all necessary measures to avoid this loss,” he told news.com.au.

“I do not believe Malaysia Airlines can meet this burden since it flew over a dangerous area.

The MH17 crash site. Picture: AFP Photo/Bulent Kilic

“The families also may be able to obtain justice from the criminals who committed these acts through an action in the International Court of Justice, but this is largely a political solution which may take years.”

Mr Wisner earlier told The Chicago Tribune that each of the 298 passengers’ families would receive an estimated $750,000.

Combined with the loss of the plane, the liability bill could hit $1 billion.

The Montreal Convention, which Australia and Malaysia are signatories to, sets out two tiers of legal recourse.

Shane Wallace of Sydney-based Carneys Lawyers said the first tier of the convention made carriers automatically liable for any injury passengers sustain on their flights, without having to prove negligence.

Victims and their families can seek damages up to a cap of $185,000 and Mr Wallace said this would be easy to prove.

People march in memory of the victims of the downed Malaysia Airlines flight MH17 in Amsterdam. Picture: AFP Photo/John Thys

The second tier allows families to seek unlimited damages, but hinges whether or not the airline can prove that it wasn’t negligent.

Malaysia Airlines has said that its flight path was approved by Eurocontrol, which ticks off on European flight paths under International Civil Aviation Organisation rules.

[#MASalert] MH17’s flight plan was approved by Eurocontrol, who are responsible for determining flight paths. http://t.co/HUIWQXl7dx

— Malaysia Airlines (@MAS) July 18, 2014

“They will argue they weren’t negligent because it was declared a safe place to fly,” said Mr Wallace, who is an associate in the firm’s aviation team.

Malaysia Airlines has cited Eurocontrol figures that show 75 different airlines flew the same route as MH17 in the two days before the incident.

“MH17’s flight path was a busy major airway, like a highway in the sky,” the company said in a statement.

Lawyers representing the family, however, are likely to seek to prove the airline’s negligence because the airline chose to fly over a known war zone.

“It is a million-dollar question and, the more I think about it, that will be the big fight,” Mr Wallace said.

He said it was possible other parties, such as Russia or the pro-Russian separatists in eastern Ukraine, could also be found liable, but it was too early in the crash investigation to know.

Lawyers would need to prove that the rebels were responsible for the attack and that Russia provided missiles to them, in order to show their liability.

A masked armed separatist militant poses for a photographer near the site of the crash of a Malaysia Airlines crash. Picture: AFP/Dominique Faget

There is a legal precedent for this, with the Libya Government paying $1.5 billion in compensation to the families of victims of the 1988 Lockerbie bombing.

The other possible outcome is that Malaysia Airlines will seek to provide compensation to the victims’ families outside of court to avoid a costly battle.

“Malaysia Airlines and its insurer may agree to set up a compensation scheme, which would reduce costs for everyone and it takes the hassle out having to sue for the loss of a loved one, which is very distressing,” Mr Wallace said.

He said compensation for each victims could range anywhere from $185,000 to more than $1 million, based on different jurisdictions’ determination of how much financial loss families might endure.

“Different courts around the world assess loss differently. Australia is fairly conservative when assessing loss and damages as opposed to the United States where there are large payouts,” Mr Wallace said.

In a statement released by Malaysia Airlines earlier this week, it said its primary focus was to care for the family members affected by MH17.

People attend a service in memory of the 298 victims of the downed Malaysia Airlines flight MH17 on July 23, 2014 at the Joriskerk church in Amersfoort.

The airline is supporting the families by providing hotel accommodation, meals, and transport assistance as well as assigning them individual caregivers.

“As goodwill, to ease the immediate families of the passengers with their economic needs, the airline is also offering a financial assistance of $US5000 to the families of each passenger,” the statement reads.

“Funds have already been made available for this purpose.

“Citibank has supported Malaysia Airlines with the logistic arrangements for the fund transfer.”

It added that this financial assistance will not be offset against the final compensation or affect the families’ legal rights to claim.

Phil Sylvester from Travel Insurance Direct said MH17 was an event that deeply affected everyone and the company extended its condolences to the families and loves ones of those on-board the flight.

Mr Sylvester said if this tragedy is determined to be an act of terrorism, then TID policies have cover for accidental death.

“The TID policy also has provision for assistance with the repatriation of remains, although in this case it appears that the Australian Government has taken over this responsibility,” he said.

People release white balloons in the air during a silent march in memory of the victims of the downed Malaysia Airlines flight MH17. Picture: AFP Photo/Olaf Kraak.