Civil Procedural Issues in the Lawsuits of MH370 in China: Jurisdiction and Limitation of Action

To mark the 2nd anniversary of MH370’s disappearance (1)

Authors: Dejian Kong * and Qihuai Zhang **

* PhD Candidate, International Institute of Air and Space Law, Leiden University, the Netherlands.

** Director, Beijing LanPeng Law Firm, P. R. China; Secretary-General, the Aviation Law Research Institute of Beijing Aviation Law Society; Guest Professor, the Civil Aviation University of China, etc.

Abstract

In order to help the families of passengers on board the missing MH370 get fair, prompt and adequate compensation, civil procedural issues in particular the jurisdiction and Limitation of Action should be clarified at the first time. Montreal Convention is the applicable law with the top priority in MH370 cases. As the major impact of MH370 cases, the courts above intermediate level where the destination of MH370 (Beijing Capital International Airport) located are competent for jurisdiction. After comprehensive consideration, China specified the jurisdiction of MH370 cases to Beijing Rail Transportation Court, which is not against the law. The Limitation of Action of MH370 cases is a period of two years, reckoned from the date on which the aircraft ought to have arrived, but the calculation including the suspension and discontinuance of that period should apply Chinese nation law. Even if the relatives of the missing passengers failed to institute an action before 8 March 2016, it does not always mean the Limitation of Action has terminated.

I. Introduction

Malaysia Airlines Flight 370 (MH370) disappeared in the early morning of 8 March 2014, while flying from Kuala Lumpur International Airport, Malaysia to Beijing Capital International Airport, China. Except for a confirmed piece of wing from the aircraft of MH370, all other including the 239 passengers and crew on board are still missing. On 29 January 2015, Malaysia government officially declared the missing MH370 an accident and its passengers and crew presumed dead.

Until the second anniversary of missing MH370 (8 March 2016), 36 actions filed by the relatives of the missing passengers have been accepted by Beijing Rail Transportation Court (hereafter referred to as ‘MH370 cases’), including one withdrawal of the action because the settlement was reached.

In order to commemorate the missing passengers of MH370, to help the relatives get fair, prompt and adequate compensation as soon as possible, two main civil procedural issues namely the Jurisdiction and Limitation of Action in MH370 cases are discussed in this paper, based on current facts released officially to the public.

II. Jurisdiction of MH370 CASES

When the court in China receives the application for case registration on civil compensation, the starting point in general would be to determine the jurisdiction according to Chinese national civil procedural laws including Civil Procedure Law of the People’s Republic of China (hereafter referred as ‘CPL’), which would have a significant impact on the choice of law, detailed procedure of court trial and litigation outcome. In addition, because of the special provisions on foreign-related civil procedures in China, the court has to identify the foreign-related elements in the case at the very beginning. As the actual carrier and one of defendants, the main business place and the locality of registration of Malaysia Airlines are outside of China, and that determines that MH370 cases are foreign-related cases according to Article 522 of Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China (hereafter referred as ‘Interpretation of CPL’). Therefore, in MH370 cases the court thereof should firstly determine whether Chinese court has the jurisdiction according to Chinese civil procedural laws in particular the special provisions on foreign-related civil procedures, and if so, the court in question should further determine the territorial jurisdiction and hierarchical jurisdiction so as to settle down the specific court. After the above process, if the court in question believes it is under competent jurisdiction over MH370 cases, it could continue the trail procedure, otherwise it shall transfer the case to the right court.

1. Territorial Jurisdiction

According to Article 260 of CPL, the international conventions concluded or acceded to by China shall prevail in their conflicts with CPL, except the reserve clauses. Both those specific bilateral and multilateral agreements on transnational civil jurisdictions, and the clauses on transnational civil jurisdictions in the text of certain treaties are included in aforementioned international conventions (2). China and Malaysia are the State Parties of two main air law conventions which refer to Warsaw Convention and certain related protocols (hereafter referred as WC instruments), and Montreal Convention (hereafter referred as ‘MC’). However, MC is designed to supersede WC instruments, according to its Article 55. Immediately after the application of MC has been confirmed, it would be able to decide which court in which State has appropriate jurisdiction. Therefore, it can be concluded here that while determining the jurisdiction of MH370 cases, the court should apply the following legal documents in the following order: (i) MC; (ii) WC instruments; (iii) Chinese national legislations. If it exists dispute of jurisdictions between Chinese national legislations. If it exists dispute of jurisdictions between Chinese national laws, the choice of law should be settled down by the relevant provisions in Legislation Law of the People’s Republic of China (3).

MC (Article 33) keeps the four types of jurisdiction regulated by WC (Article 28), those are the courts located at (i) the domicile of the carrier; (ii) the carrier’s principal place of business; (iii) the place of establishing or making the contract; or (iv) at the place of destination. What’s more, for the convenience of passenger, MC introduces the fifth jurisdiction which is the the principal and permanent place of residence of the claimant in the case of personal injury or death. In the situation of multi-jurisdictions, the claimant has the right of choice, but it is limited to the territory of a State Party of MC. From the current information about MH370 cases released to the public, the jurisdiction has a distinct link with the jurisdiction of Chinese court in a strong way, that is the destination of MH370. However, the question whether the aforementioned ‘destination’ refers to ‘China’, ‘Beijing’ or ‘Beijing Capital International Airport’ needs to be clarified further.

From the perspective of international public law, the parties of MC are ‘States’, and the purpose of MC is to coordinate the relationships between different ‘States’. Therefore, the term ‘destination’ in MC refers to ‘State’ rather than a specific location. The above opinion could also be supported by the words in Section 4, Article 33 of MC: ‘questions of procedure shall be governed by the law of the court seised of the case’, which means that the lawsuit may be brought to the State of ‘destination’, (4) and the specific jurisdiction, as one of procedural issues, should be determined by national law in that State. The above theory will practically make a difference for the determination of jurisdiction of MH370 cases in Chinese national law, supposing that:

MH370 was finally crashed in Chinese territorial water of South China Sea, which is in the jurisdiction of, let us say, Sansha City, Hainan Province.

Based on the above opinion, if the term ‘destination’ in Article 33 of MC is interpreted as the State – China, the court of Sansha City, as the place where the tort occurs, or its superior has the jurisdiction of MH370-related cases according to the principle of lex loci delicti as lex sausae regulated in Article 29 of CPL. However, if the term ‘destination’ is construed narrowly as ‘Beijing Capital International Airport’ rather than ‘China’, the court of Shunyi Distract, where the airport is located, and its superior have jurisdiction of MH370 related cases, which excludes the jurisdiction of any other Chinese courts.

The above shows that different theories result in different jurisdictions in the cases of MH370. Therefore, the term ‘destination’ has to be construed clearly by Chinese law so as to apply the right jurisdiction over MH370 cases.

In Chinese legal texts in particular the Contract Law of the People’s Republic of China, Tort Law of the People’s Republic of China and CPL, the terms such as ‘the defendant’s place of domicile’, ‘the place where the contract is performed’, ‘the place of domicile of the plaintiff’ and ‘the place of domicile of the plaintiff’ are always construed narrowly. On the one hand, the specific places in those terms could never be interpreted as ‘State’, otherwise there is no way to determine the specific jurisdiction because all those places are usually inside the territory of China; on the other hand, those terms could nor explained as the ‘province’, ‘city’ or ‘county’ where actually has more than one courts.

Although Chinese national laws including Constitution of the People’s Republic of China and Law of the People’s Republic of China on the Procedure of the Conclusion of Treaties do not regulate the legal status of international convention in Chinese legal system, since the ratification from the Standing Committee of the National People’s Congress the treaties have been integrated into Chinese legal system, which requests the legal interpretation of those treaties should also follow the general rules in Chinese legal practice. Meanwhile, the texts used in the provision (Article 3 of MC) of document of carriage are also ‘the places of departure and destination’, but almost all flight tickets in practice indicate the specific name or code of arrival airport instead of merely the name of arrival city, let alone arrival State. Therefore, in view of Chinese general rules of legal interpretation, which requests the same term used in the same legal instrument should have the same meaning, the term ‘destination’ in Article 33 of MC could only be construed as the arrival airport showed on the flight ticket, (5) rather than the name of arrival city or State. So in MH370 cases, the court with appropriate jurisdiction in China is the court of Shunyi Distract or its superior where Beijing Capital International Airport is located.

2. Hierarchical Jurisdiction

After the clarification of territorial jurisdiction, the next step in Chinese law is to decide which level of court should be applied on the basis of nature and impact of MH370 cases (6). Air law treaties including MC do not cover the issue of hierarchical jurisdiction, so the hierarchical jurisdiction of MH370 cases should and could only apply the law of the forum, that is Chinese national law. Although Part Four of CPL contains special provisions on foreign-related civil procedures in China, it does not regulate hierarchical jurisdiction, so that the hierarchical jurisdiction should only be determined in accordance with general rules of CPL. Considering the different understanding of major impact of MH370 cases, the intermediate courts (Beijing Third Intermediate People’s Court),(7) the higher court (Higher People’s Court of Beijing Municipality) or the supreme court (Supreme People’s Court of The People’s Republic of China) is competent for the jurisdiction over MH370 cases according to Article 18, Article 19 and Article 20 of CPL respectively.

3. Speified Jurisdiction

Specified jurisdiction in Chinese law refers to a court at a higher level specifies jurisdiction to a court at a lower level through a ruling. Article 36 and Article 37 of CPL regulate two situations of specified jurisdiction, where has dispute over jurisdiction between the courts and where exists special reasons such as collective disqualification of judges, but both of them are usually the specified jurisdiction between different territories. Article 38 of CPL regulates the specified jurisdiction between different levels of court including the specification from superior to lower level and the contrary situation. Although there is no any dispute on the territorial jurisdiction of MH370 cases as discussed above, it is unclear that whether the ‘major impact’ of MH370 cases is in the jurisdiction scope of the intermediate court, the higher court, or the supreme court. Bearing in mind of the huge number of missing passengers on board, the supreme court of China or higher court of Beijing shall have the right to claim for the jurisdiction of MH370 in addition to the intermediate court of Beijing, according to Article 20 and Article 19 of CPL respectively. However, the jurisdiction of MH370 was finally assigned to Beijing Rail Transportation Court (a court of basic level), and that is against the regulation on hierarchical jurisdiction of Provisions of the Supreme People’s Court on Some Issues Concerning the Jurisdiction of Civil and Commercial Cases Involving Foreign Elements (Article 1), according to which a court of basic level is not competent for a foreign-related case.

It is apparently that the specified jurisdiction of MH370 cases complies with the case of ‘the specification from superior to lower level’ in the provision of Article 38 of CPL. In addition, Article 42 of Interpretation of CPL limits aforementioned specified jurisdiction into three categories, those are (i) a case concerning a debtor in the bankruptcy procedure; (ii) a case involving numerous parties who are inconvenient to institute actions; or (iii) a case of any other type as determined by the Supreme People’s Court, which is a catch-all clause. On the one hand, MH370 applies to the second category, or could be viewed as the special case in the third category; on the other hand, Article 5 of Several Provisions of the Supreme People’s on the Jurisdiction of Railway Transport Courts over Cases regulates that Beijing Rail Transportation Court is competent to deal with the case specified by higher court.

It is important to note that the direct superior court of Beijing Rail Transportation Court is Beijing Intermediate Railway Transportation Court (Beijing Fourth Intermediate People’s Court) rather than Beijing Third Intermediate People’s Court which was concluded above. Therefore, it could be speculated that the superior which made the specification could only be the Higher People’s Court of Beijing Municipality or the Supreme People’s Court, which means the specification of MH370 cases’ jurisdiction was downward skip-level. According to the texts of Article 38 of CPL, there is no indication to forbid the skip-level specification. Meanwhile, the specification of jurisdiction in civil procedure itself is the breakthrough of legal jurisdiction, and it does not have to obey the territorial and hierarchical jurisdiction in law. Therefore, after comprehensive consideration, it is not against its national law for China to specify the jurisdiction of MH370 cases to a basic level court – Beijing Rail Transportation Court. But the official reasons why that specification is necessary should be disclosed further, so as to protect the litigants’ right to know.

4. Relationship with the jurisdiction in other States

If the claimants have filed lawsuits in China, does that mean other States have to give away their jurisdictions? This is actually the question of parallel proceedings, which refers to the litigations arising from the same set of facts are filed in different courts in the same State or different States by the same party or parties (8). For the case which has been registered by one court in China, other Chinese courts carry out the principle of ne bis in idem strictly. However, for the foreign-related cases, Chinese courts could accept the case, which has been registered in foreign court, under the following two restricted conditions in Article 533 of Interpretation of CPL: (i) Chinese court has legal jurisdiction; and (ii) the judgment or ruling rendered by the foreign court has not been acknowledged by any of Chinese courts. But the above are just Chinese regulations, whether other States accept MH370 cases which have been registered in Chinese courts totally depends on the law in those States in question or the treaties between China and them, if any.

Considering that both the U.S., as the State of manufacturer of missing aircraft, and the United Kingdom, as the State of producer of engines of missing aircraft, are much possible to be involved in MH370 cases after the causes of accident are released step by step in the future, the above two States’ attitudes over parallel proceedings should be addressed further in practice.

III. Limitation of Action of MH370 cases

1. The duration of Limitation of Action

According to Article 7 of Law of the People’s Republic of China on Choice of Law for Foreign-related Civil Relationships, the Limitation of Action shall apply the proper laws applicable to the relevant foreign-related civil relations. As mentioned above, MC in MH370 cases has the top priority in the choice of law, the applicable law for duration of Limitation of Action is MC. Article 35 of MC regulates that if the flight agrees on the arrival time, the Limitation of Action shall be a period of two years reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived; if there is no agreements on arrival time, the period of two year shall be reckoned from the date on which the carriage stopped. Apparently, considering the missing status of MH370, the Limitation of Action of MH370 cases is a period of two years reckoned from the date on which MH370 should have arrived at Beijing Capital International Airport, that is 8 March 2014. In addition, it should be noted that the starting point of the two-years period is fixed according to the texts of Article 35 of MC and it has nothing to do with whether or when MH370 was declared an accident officially.

As MC only unified certain rules of carrier liability excluding many other rules such as aviation product liability, the aforementioned two-years period from the scheduled arrival time could only apply to the case where the carrier is the defendant. In MH370 cases, if the claimants institute other lawsuits against the manufactures of defective aircraft or its components, the determination of Limitation of Action should apply the law which is decided by Chinese rules on conflict of laws, rather than MC.

Before the Limitation of Action was finally settled down, the last thing is to check whether the passenger and airline made any special agreement on the extension of Limitation of Action, although the likelihood of that is minimal. As MC does not indicate that the two-years period could not be changed, both international and Chinese scholars insist that the Limitation of Action could be changes by agreement as long as that period is still between the minimum period and maximum period requested by law (8). However, According to Article 2 of Provisions of the Supreme People’s Court on Several Issues concerning the Application of Statute of limitations during the Trial of Civil Cases (hereafter referred as ‘Provisions of Limitations’), the court shall not support any agreement reached in violation of law between the parties on extending or shortening the statute of limitations or waiving any interest from the statute of limitations. Therefore, if there is no official interpretation of Article 35 of MC to allow the change of Limitation of Action, at least in Chinese national law, the duration of the Limitation of Action is fixed at two years in MH370 cases.

2. Calculation of Limitation of Action

As to the calculation of Limitation of Action, MC delegates the power to its State Parties by the law of the court seised of the case. Therefore, Chinese provisions on the suspension and discontinuance of Limitation of Action shall apply to MH370 cases.

A. The suspension of Limitation of Action

According to Article 139 of General Principles of the Civil Law of the People’s Republic of China (hereafter referred as ‘General Principles of the Civil Law’), the Limitation of Action shall be suspended during the last six months of that Limitation if the plaintiff cannot exercise his/her right of claim because of force majeure or other obstacles. The Limitation of Action shall resume on the day when the grounds for the suspension are eliminated. In MH370 cases, what is most likely to trigger the suspension of Action of Limitation is ‘other obstacles’, for example, suppose that the missing passenger is the sole legal representative until the last six months, the Limitation of Action is under suspension until the new legal representative is identified, according to Article 20 of Provisions of Limitations.

B. Discontinuance of Limitation of Action

According to Article 140 of General Principles of the Civil Law, a Limitation of Action shall be discontinued if a suit is brought or if one party makes a claim for or agrees to fulfilment of obligations. A new Limitation shall be counted from the time of the discontinuance. As the claimants of MH370 cases filed the lawsuits before the last day of Limitation of Action (8 March 2016), that Limitation was re-counted after the day of submitting complaint (10). However, even though some relatives of the missing passengers failed to institute the lawsuits before 8 March 2016, it does not always mean that two-years Limitation has terminated. Those relatives could argue, inter alia, as fellows based on Chinese law:

(1) So far Malaya Airlines has made several statements and press conferences which request the relatives of the missing passengers start the procedure for claims. Those requests actually constitute aforementioned ‘one party agrees to fulfilment of obligations’ and then the Limitation of Action discontinued and is recalculated since the day of the last statement or press conference. Even after the termination of Limitation of MH370 cases, if Malaysia Airlines, regardless of publicly or secretly, agrees to carry out the obligations of compensation to right holders and to this end sign paper documents such as indemnity agreement or indemnity schedule, those paper documents could be viewed as the re-recognition of its responsibility for compensation, and the right of claimants based on those paper documents shall be protected by law according to Chinese legal practice.

(2) In Chinese law, the precondition to claim for compensation of death damages is the missing passengers have been recognized as ‘death’ before any general civil procedures was started. As no body of the missing passengers has already been found so far, if the relatives want to start the claim for compensation, the special procedure of death declaration in law has to be finished firstly. Before the death declaration, all the missing passengers are just ‘missing’ rather than ‘death’. According to Article 137 of General Principles of the Civil Law, a Limitation of Action shall begin when the entitled person knows or should know that his/her rights of claim for compensation have been infringed upon. Therefore, it is reasonable to understand that before the death declaration of the missing passengers, those passengers are just ‘missing’, and the relatives are hoping and believing that those passengers have not been dead. So, the relatives could argue that they did not know that their rights for compensation resulting from ‘dead’ passengers have been infringed and therefore the Limitation of Action shall not begin before those passengers were declared as ‘death’ in law. Although on 29 January 2015, Malaysia government officially declared the missing MH370 an accident and its passengers and crew presumed dead, it has no legal effect in Chinese national law before that declaration is officially accepted by Chinese government. Taking a step back, even though that declaration is recognised by Chinese government on the same day, all the passenger on board MH370 were ‘missing’ rather than ‘dead’ before 29 January 2015.

For the above, some scholars or lawyers may worry that the relatives of the missing passengers may postpone the starting point of Limitation of Action again and again which may lead to legal uncertainty. In fact, the above worry is unnecessary, bearing in mind that:

• As one of interested persons, Malaysia Airlines or other defendants could also start the special procedure of death declaration in the Chinese competent court, according to Chinese national law.
• the Maximum Limitation of Action regulated in Chinese nation law makes the court shall not protect the rights of claim for compensation if 20 years have passed since the infringement. In other words, the rights of the relatives of the missing passengers will be expired anyway after 8 March 2034.

IV. Conclusion

It has been more than two years since the missing of MH370. Although there is still no enough confirmed information about the searching of MH370, the liable party or parties should provide fair, prompt and adequate compensation to the relatives of the missing passengers at the first time, so as to recover them a calm life as soon as possible. In order to start the civil procedure in an appropriate way, the first things to be cleared by the parties are, inter alia, the jurisdiction over MH370 cases and the Limitation of Action.

First of all, the fact that one of main defendants is Malaysia Airlines makes the foreign-related element in MH370 cases, and therefore the determination of jurisdiction over MH370 cases has to analyze whether China has the jurisdiction and then which is the competent court specifically according to Chinese rules on choice of procedural law. In MH370 cases, MC is the applicable law with the top priority, and that determines that the court with appropriate territorial jurisdiction in China is the court of Shunyi Distract or its superior where Beijing Capital International Airport is located. In addition, according the provisions of CPL, Beijing Third Intermediate People’s Court, the Higher People’s Court of Beijing Municipality or the Supreme People’s Court of The People’s Republic of China has the hierarchical jurisdiction of MH370 cases depending on the different understandings of ‘major impact’ of MH370’ disappearance in CPL. However, through comprehensive consideration, the jurisdiction of MH370 cases was finally specified to a basic level court – Beijing Rail Transportation Court, which is not against Chinese national procedural law.

Secondly, the Limitation of Action of MH370 cases is a period of two years reckoned from the date (8 March 2014) on which MH370 should have arrived at Beijing Capital International Airport. The calculation of that two-years period applies to Chinese national law on the suspension and discontinuance of Limitation of Action. However, according to Chinese national law, it does not always mean that the Limitation of Action has terminated even after 8 March 2016.

At last, let us continue to pray for MH370…

______________________

(1) The paper is only for academic research, without any official opinion of lawyers in MH370 cases.

(2) Yuanmin Zheng and others, Private International Law (CITIC Publishing House, 2002), at 89.

(3) Although Civil Aviation Law of the People’s Republic of China is the special law in the aviaiton sector in China, it does not include any special provisions on the jurisdiction of air liability related cases.

(4) See Charles E. Robbins, Jurisdiction Under Article 28 of the Warsaw Convention, 9 (4) McGill Law Journal 1963.

(5)  See Giemylla/Eshmid (editors), Montreal Convntion: Comentary (Kluwer Law International, 2006), at Article 33-20; Malcolm A. Clarke, Contracts of Carriage by Air (Lloyd’s List, 2010), at 180; Air France v. Liberator, CA, Paris 8.12.1973, (1974) 28 RFDA 287, affmd Cass 16.4.1975, (1975) 29 RFDA 293.

(6) The sequence to determine territorial jurisdiction and hierarchical jursisdiction is not regulated in Chinese law, but it makes no difference to the final outcome of specific jurisdiction of MH370 cases.

(7) Shunyi Distract, where Beijing Capital International Airport is located, is under the leadership of Beijing Third Intermediate People’s Court. Please visited the official website of Beijing courts,

http://www.bjcourt.gov.cn/fyzy/detail.htm?id=29, accessed 10 March 2016.

(8) James McComish, Stay of Parallel Proceedings and the Brussels I Regulation, 73 (2) The Cambridge Law Journal 2014.

(9) Malcolm A. Clarke, Contracts of Carriage by Air (Lloyd’s List, 2010), at 182; Shengping Gao, Certain Issues in the legislation of Limitation of Action, (2) Legal Forum 2015.

(10) Be noted that it is not the day of registration by the court. See SONG Xiaoming, LIU Zhumei and ZHANG Xuemei, Understanding and application of Provisions of the Supreme People’s Court on Several Issues concerning the Application of Statute of limitations during the Trial of Civil Cases, (21) People’s Judicature 2008.