Supreme Court rules on liability exoneration for handling companies

In two 2005 judgments the Supreme Court examined the enforceability of Article 8 of the International Air Transport Association's Standard Ground Handling Agreement.

In both judgments (issued on July 14 and October 3 2005) the court declared the validity under Spanish law of the exoneration from liability established in Article 8, Paragraph 1 of the agreement:

"The carrier shall make no claim against the handling company and shall indemnify it...against any legal liability for claims or suits, including costs and expenses incidental thereto, in respect of: (a) delay, injury or death of persons carried or to be carried by the carrier; (b) injury or death of any employee of the carrier; (c) damage to or delay or loss of baggage, cargo or mail carried or to be carried by the carrier; and (d) damage to or loss of property owned or operated by or on behalf of the carrier and any consequential loss or damage arising from an act or omission of the handling company in the performance of this agreement, unless done with intent to cause damage, death, delay, injury or loss, or recklessly and with the knowledge that damage, death, delay, injury or loss may occur."

In the first case Spanish airline Spanair filed a claim against Iberia for damage caused by Iberia in two of Spanair's aircraft while providing handling services at two Spanish airports. After analyzing Article 8, Paragraphs 1 and 4 of the agreement, the court ruled that, despite having caused damage due to negligence, Iberia was not liable. According to the court's case law, Article 8 is valid and applies in cases where damage was caused by negligence. However, this clause is not applicable where damage is due to wilful misconduct. Finally, the court highlighted that Article 8 of the agreement is not abusive, as it establishes duties and exoneration provisions for both the carrier and the handling company.

In the second case a claim was filed against Iberia for damage caused while providing handling services to the airline Hispano Irlandesa de Aviación in various Spanish airports. The court stated that, although Article 8 of the agreement is complex, it is not vague for the purpose of applying the principle of contra proferentem. In order to prove the nullity of Article 8, Hispano Irlandesa de Aviación alleged that the General Terms and Conditions of Agreements Law 1998 was applicable to the case. The court dismissed this argument since this law was not in force when the events occurred. Moreover, the court confirmed the bilateral nature of the exoneration provision, which operates in favour of both the airline and the handling company. Finally, the claimant alleged that Article 8 of the agreement was invalid under the Consumers and Users Law. The court dismissed the claim on the grounds that the airline was not the final addressee of the services provided under the handling agreement, as handling activities were integrated in the air transport business marketed by the airline.

The Supreme Court has thus laid the foundations for the enforceability of Article 8 and followed the approach of various court of appeal decisions (eg, the Madrid Provincial Court rulings of September 30 2002 and May 14 2004). The exoneration established in Article 8 of the agreement must nevertheless be construed restrictively; wilful misconduct and other similar conduct, among other things, are not protected by this clause.