Dear Colleagues,

We set out below a short summary of a recent Israeli District Court decision in the field of aviation law, which may be of interest to you. In a nutshell, the Israeli court Rules that compensation for mental anguish can be awarded by virtue of the Montreal Convention [“Convention for the Unification of Certain Rules Relating to International Carriage by Air, Montreal 28.5.1999”].

On November 20, 2019 the Tel Aviv District Court rendered a fundamental ruling on a question—whether it may be possible, in accordance with Israeli law, and taking into consideration the provisions of the Montreal Convention, to award compensation for mental anguish in baggage claims filed against airlines. The court answered this question positively, but held that the scope of compensation would be limited to the maximum amount as specified in the Montreal Convention.
The case concerns an appeal, filed by Iberia Airlines, on a judgment rendered by the Small Claims Court, which ordered it to pay compensation for mental anguish caused to passengers who went on a cruise shortly after their flight had landed in the intended destination, and whose luggage was delayed for approximately two weeks.

In light of the fact that the case concerns a fundamental question on which uniformity is lacking in rulings rendered by the lower instances in Israel, leave for appeal was duly granted and the case was referred to an expanded panel of 3 judges for deliberation.

The court examined the interpretation of the term “damage” in Article 19 of the Montreal Convention, which provides that “The carrier is liable for damage occasioned by delay in the carriage by air of passengers, baggage or cargo …” and, particularly, whether the term “damage” includes also mental damage.
To this end, there was examined, inter alia, the interpretation accorded to the term “bodily injury” (in Article 17(1) of the Convention and Article 17 of the Warsaw Convention that preceded it), which provides that: “The carrier is liable for damage sustained in case of death or bodily injury of a passenger …”, with reference being made to the protocols and work papers of the drafters of the Montreal Convention, in real time.
In this connection, the court held that the center of gravity in the Convention begins to shift from protecting the airline companies, to protecting the individual rights to compensation.  After the delegations panel failed to reach agreement on the issue of mental damage, it was decided that the precedents established in every country in this regard will remain unchanged (in other words, the term “bodily injury”—which still originated in the Warsaw Convention—would remain in effect, without uniform interpretation).
Therefore, the court reached the conclusion that the binding ruling delivered by the Israeli Supreme Court in the case of Dadon v. Air France from 1984, whereby the term “bodily damage” should be interpreted broadly, so that it will include also mental damage and mental anguish (regardless of the existence of bodily damage), will continue to remain in effect.
In this connection the court maintained the position that the legal situation in Israel differs from that prevailing in the USA [Eastern Airlines v. Floyd 499 U.S. 530 (1991)] and in other countries, for example, Australia [Kotsambasis v. Singapore Air (1997) 148 ALR 498] and the UK [Morris v. KLM (2002) 2 AC 628], where it was held that mental damage alone (as distinct from mental damage that accompanies physical damage), does not fall within the term “bodily damage”.
The court rejected Iberia Airlines’ argument that it was not allegedly possible to claim, by virtue of the Convention, compensation for mental damage on account of Article 29 of the Convention, which provides that: … punitive, exemplary or any other non-compensatory damages shall not be recoverable …”. In so doing, the court held that, according to Israeli torts law, mental damages are compensatory and, thus, the same interpretation should apply in this connection as well.

In conclusion, the court unanimously held that where the Montreal Convention imposes liability on an airline company in baggage related claims, it can, in appropriate circumstances, award compensation also for mental anguish, save that the total amount of compensation to be awarded shall not exceed the ceiling as specified in the Convention, in a scope of 1,131 Special Drawing Rights for each passenger.

The District Court ruling does not constitute a binding precedent under Israeli law, but does serve as a guiding judgment on whose basis the lower instances are expected to rule.