4 LEGAL COLUMN
GROUND HANDLING INTERNATIONAL APRIL 2013
Article 1 and Article 8 Len Kirsch considers the amendments made to the latest SGHA document.
ell, so far, so good. The changes in the 2013 IATA SGHA will hopefully be
well received. Article 8 is basically unchanged, except for what are probably a few typographical corrections. Annex A is more comprehensive, which is always a good thing from a legal perspective. However, the battle over Article 8 is not over and several carriers continue to call for change in how consequential damages are addressed. This will be a topic that I will discuss at a panel during the upcoming IATA IGHC in Vancouver, in May.
Perhaps the most important changes in the 2013 edition are the directives in Article 1, Provision of Services, to mandate compliance with law in general, but most importantly with anti- bribery, anti-trust and labour relations laws.
As counsel, I am always supportive of legal compliance, but I wince at the need to stress labour relations. In the US, especially in California, and in countries with oppressive labour laws, the ground handling community is constantly battling against well- intentioned but burdensome labour laws which punish the handling community rather than provide an incentive to hire employees who can benefit from intense training, opportunities for advancement and a work environment which, while physically demanding at times, is also exciting.
While the assumption is that IATA is
referring to management by requiring ground handling companies to ensure that their employees comply with laws in their home countries as well as countries where services are provided, the requirement to keep on top of IATA and ICAO rules, regulations and procedures, as well as international treaties, is not to be taken lightly. Generally, executive management of a company is tasked with what I call big picture compliance, but based on the wording of the new Article 1, I recommend that handling companies update their compliance programmes to incorporate the broad range of these legal “mandates” for junior and senior management, and other employees who may “need to know.” The updated compliance
programme should include a primer of important treaties, conventions, IATA and ICAO rules, regulations and procedures, with a generalised discussion of competition law and activities that can be characterised as criminal business activity (for instance, bribes and kick-backs).
In fact, the SGHA is explicit that handling companies should ensure that “employees assigned to the performance of this Agreement… be aware of the essentials of competition and anti-trust regulations in the country of residence, establishment and as well as ‘extra-territorial application.” This language imposes an affirmative obligation on handling companies to train its senior and junior management to comply with many different laws that may have common elements, but which may also at times strongly clash, or have further-than-expected reach. The provision is further extended
to require compliance with “rules governing bribery, kick-backs, secret commissions and payments to government officials in countries of residence.” However, I am not sure how to interpret the phrase that follows, to wit: “establishment as well as such regulations with extraterritorial application.” Does this mean that if payment to a government official in a country where services are provided is not strictly illegal, it would be okay? I wonder why this language does not also include a prohibition against “secret” payments to air carrier or airport customers, which I suspect in the distant past was a problem much greater than payments to government officials? Or does it? In fact, the last paragraph of 1.1 seems to require compliance with “any other applicable law or regulation, whose breach or violation by a Party of its employees could cause damage to the other Party of its employees.” While this clause is well-intentioned, the reality is that a violation of law is always “illegal,” so it should simply state that any intentional violation of law is a breach of the SGHA. The reason why I use the word “intentional” is that every day, inadvertent violations of minor rules and regulations will occur. These violations can be reduced but never completely
eliminated in an industry with so many rules, time pressures and a blue collar workforce.
Overall, the expansion of Article 1 was, and is, a worthy effort. Rather than worrying how this new wording may be interpreted in a contract dispute, since few contract disputes under the SGHA end up in litigation, I recommend that every handler implement the broad concepts contained in this new wording in a way that makes sense for your company.
Article 8 on Liability is still the most important legal provision of the SGHA. For those unable to compare the 2008 and 2013 editions, the major amendment is a change to the limits of liability from the Warsaw Convention to the Montreal Convention and any amendment to the Convention in force at the time of a loss or damage. Thus, 17 SDR per kilo is no longer specified; rather the limit is dependent on the applicable limit under the Montreal Convention.
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