this case Panama – has a respon- sibility to investigate the incident in accordance with established international procedures (known as the Casualty Code). In terms of responsibility for the search and rescue (SAR) operation, as the incident occurred within Japan’s SAR region, the Japanese authorities have been leading the SAR response. As the SAR opera- tion has now been suspended, MNZ expects the focus will now move to understanding the causes of the incident. In any SAR operation, once extensive searching is completed – and when it is judged that there is a very small chance of finding any more survivors – international guidelines provide a process to be followed to allow the suspension of active search efforts. The respon- sible authority will make such a decision (as Japan has done) after a careful review of all the relevant circumstances. In the meantime, MNZ is continu- ing to work with and support MPI, the Ministry of Foreign Affairs and Trade, and other NZ Government agencies to ensure a coordinated response to the incident from a New Zealand perspective. to protect New Zealand’s reputa- tion as a responsible exporter of animals, and is a requirement for the export of live animals. In considering whether to issue an AWEC, the director-general must have regard to a number of matters set out in Section 43 of the Animal Welfare Act 1999, including the mode of the proposed transport, the length and nature of the journey proposed, the suscep- tibility of harm and distress to the animals under the conditions of the proposed transport, the manner in which the welfare of animals previ- ously exported by an applicant was attended to on previous journeys, New Zealand’s reputation as a responsible exporter of animals, and any other matters relevant to the welfare of the animals. Given the uncertainty that still surrounds the Gulf Livestock 1 incident, the director-general has temporarily suspended approving the issuing of AWECs for export by sea, pending advice from the review. O n 14 August 2020, the Gulf Livestock 1, carrying 5867 breeding cattle and 43 crew, left Napier for China. On 2 September, the vessel issued a distress signal while in the waters off Japan after encountering high waves and strong winds caused by a typhoon that was in the locality at the time. Three crew were subsequently res- cued from the sea, but the vessel, the remaining crew and cattle have been lost. Ministry for Primary Industries (MPI) director-general Ray Smith says Mike Heron QC has been appointed to lead the review, supported by retired Rear Admiral Tony Parr, which is expected to take about a month. The review will assess the assurances MPI receives when it considers an appli- cation for an animal welfare export certificate (AWEC). Welfare of animal exports The purpose of an AWEC is to pro- tect the welfare of animals being exported from New Zealand and “The current temporary suspen- sion of cattle livestock exports will remain in place until the review report is completed and consid- ered,” says Mr Smith. “This is an extremely difficult time for the fami - lies of those on the Gulf Livestock 1 and my thoughts are with them. “At the heart of our decision to temporarily suspend cattle live- stock exports is a commitment to help ensure people and animals on livestock export boats are safe. We are working closely with exporters, who have provided assurances that animals currently on pre-export isolation farms are in good condi- tion and well looked after.” Search and rescue suspended In response to the loss of the Gulf Livestock 1 in international waters, Maritime New Zealand (MNZ) is working with a number of agencies in New Zealand and overseas on all aspects of the incident. MNZ is the Crown agency responsible for maintaining the safety and security of maritime transport within New Zealand. MNZ says that in terms of any investigation into the vessel’s loss, under international conventions the flag state for the vessel (the place where the ship is registered) – in T he international carriage of cargo, baggage and pas- sengers by air is governed by the Montreal Convention, an interna- tional treaty which is applied in New Zealand by the Civil Aviation Act 1990. The convention’s liability regime is mandatory and applies regardless of fault to whatever happens between an airport in one country and an airport in another country. A carrier can accept greater liability than that set out in the convention, but cannot ‘contract out’ and attempt to lower or limit its liability. The same applies to domestic air carriage and carriage by sea (albeit with different limits). The intent of these no-fault, mandatory liability regimes for the carriage of goods is to provide consistency and certainty, given that international transport by its nature involves multiple jurisdic- tions, variances in domestic law, and staff in multiple locations, often not under the direct control of the airline/shipping line which first received the goods. Air carriers are liable under the Montreal Convention up to a defined monetary amount for death, injury or delay to passen- gers; destruction, loss, damage or delay to checked baggage; and destruction, loss, damage or delay to cargo. The liability limits are not denominated in any particular country’s currency, but rather in ‘special drawing rights’ (SDRs). In addition, the bill proposes to give the Disputes Tribunal express jurisdiction to hear disputes over Montreal Convention liability limit claims for lost, delayed and damaged baggage and delayed flights – but not passenger injury and death or cargo claims. The practical effect Apart from passengers and cargo owners receiving more in the event of loss, damage or delay, other practical implications of the increased liability limits for carriers and freight forwarders include the following. Review your insurance arrangements Policies should be reviewed, or insurers/brokers consulted, to confirm that adequate cover is in place to account for the increased potential liability. Air carriers should be aware that Article 50 of the Montreal Convention requires them to maintain adequate insur- ance covering their liability under the convention. Review your contracts and T&Cs Waybill terms, freight forward- ing terms and other applicable contracts should be reviewed to update any reference to liability limits based on the old convention limits. Look out for any reference to 19 SDRs (or its NZD equivalent). As carrier costs for airfreight increase due to the increased risk and insurance costs, importers and exporters can expect these costs to be passed on to them, which will be unwelcome news Significant increase in liability for airfreight By Chris Dann and Joshua Oh In a year to forget for international airlines, the hits keep coming. From 28 August, air carrier liability for loss, damage or delay significantly increased. Now, freight forwarders and others who contract for carriage by air will be impacted by this 13.9% increase, and exporters and importers can expect the cost of airfreight to further increase. Expect cost increases As carrier costs increase due to the increased risk and insurance costs, we expect these costs to be passed on to customers. This will be unwelcome news for importers and exporters who are already facing capacity shortages and sharply increased costs as a result of the massive dropoff in international passenger flights as a result of Covid-19. Most airfreight is carried in the belly of passenger planes. Statistics New Zealand announced a 16% rise in the cost of transportation services in the June 2020 quarter. International Air Freight Capacity Scheme In a piece of positive news, the NZ Government has agreed to extend the International Air Freight Capacity (IAFC) Scheme, adminis- tered by the Ministry of Transport and NZTE, which was due to expire at the end of August. The scheme provides financial support for SDRs are a mix of currency values established by the International Monetary Fund and fluctuate daily. As at the date of this article, 1 SDR = NZ$2.12. What’s changed? The Montreal Convention requires a review of liability limits every five years to reflect inflation – the weighted average of the annual change in the consumer price indices of the United States, Japan, China, the European Union and the United Kingdom. This is the first increase since 2009 as no change was made at the 2014 review. The International Civil Aviation Organization has determined that the accumulated rate of inflation since the last review is 13.9%. Figure 1 below sets out the applicable limits and this year’s increase. Easier enforcement on the way Last year, the NZ Government released an exposure draft of a new Civil Aviation Bill to replace the current Civil Aviation Act 1990 and the Airport Authorities Act 1966. The proposed changes include: ▶ A new drug and alcohol management scheme for commercial aviation operators ▶ Provisions which incorporate ‘just culture’ principles in the reporting of aviation incidents ▶ Amendments which take into account new technology like drones ▶ Clarification of aviation security officer powers ▶ Amendments to the authorisation regime for airline cooperative agreements (alliances). Internationally recognised partner Chris Dann heads the transport and logistics team for law firm Anthony Harper, and Joshua Oh is a solicitor in the same team; together, they and the team are one of the few in New Zealand with strength and experience along all facets of the supply chain www.anthonyharper.co.nz Independent review launched into assurances for safe transport of livestock by sea The Gulf Livestock 1 was carrying 5867 breeding cattle and 43 crew when it was lost in a typhoon off Japan on 2 September The Ministry for Primary Industries (MPI) has launched an independent review of the assurances it receives for the safe transport of livestock by sea following the loss of the Gulf Livestock 1 in September in a maritime tragedy. RELEVANT LIABILITY SDR CHANGE NZ$ EQUIVALENT VALUE Death or injury to passengers 113,000 to 128,821 (per passenger) $271,380.29/passenger ($33,348 increase) Damage caused by delay to passengers 4,694 to 5,346 (per passenger) $11,261.61/passenger ($1,372 increase) Destruction, loss, damage or delay to baggage 1,131 to 1,288 (per passenger) $2,713.23/passenger ($330 increase) Destruction, loss, damage or delay to cargo 19 to 22 (per kg) $46.34/kg ($6.30/kg increase) international airfreight carriers to guarantee airfreight capacity on key routes with airline and carrier agreements. The scheme launched in May with an initial schedule of 53 weekly flights from New Zealand to key export destinations. In response to demand from the business community, the schedule has since grown to support 70 weekly flights as at the beginning of August. This represents about half of all the international flights flown from New Zealand each week. The support agreements are now expected to be in place until the end of November 2020. Cont. from page 30 Cont. on page 31 30 www.ftdmag.co.nz FTD MAGAZINE | October – November ’20 31 LEGAL & LABOUR LEGAL & LABOUR