In March 2024, we reported on the Supreme Federal Court (“STF”) decision in the Sura v. Cargolux claim, whereby 7 out of 10 STF justices confirmed that the cargo liability limits in the Montreal Convention (“MC99”) should be enforced. (Brazil Supreme Court decision: A new trend that will end judicial inconsistency over limitation of liability in aviation cargo claims? – HFW)

Introduction

That decision was a positive development which would, it was hoped, put an end to the inconsistent approach of the local courts in applying international air carriage conventions to consumer claims but not to claims brought by the subrogated insurers of aviation cargo claims. In this article we analyse the case law following this decision.

São Paulo 2nd Instance Court

In this, the most important State Court of Brazil, 26 out of 55 decisions handed down applied MC99 correctly.

In two cases, the judges expressly mentioned that the insertion of the acronym “NVD” (i.e., “no value declared”) in the air waybill amounts to evidence that the liability of the carrier was limited, pursuant to Article 22.3 of MC99. In another ruling, the court expressly stated that there was no declaration of value in the air waybill and added that the invoices attached to it cannot serve as a declaration of value to override the application of the cargo weight-based limitation of MC99.

Surprisingly, 25 rulings recognised the application of MC99, but mistakenly failed to enforce the cargo liability limit on the grounds that the invoices attached to the airway bill amounted to a declaration of the value of the cargo.  

We have also located a judgment that concluded that the declaration of value for customs in the air waybill equated to a special declaration of value of the cargo pursuant to Art. 22.3 of MC99. Again, a wrong interpretation of the air waybill and of the text of MC99. It clearly attempts to circumvent the declaration of value requirement of the convention, ignoring the requirement for a supplementary payment. We looked at case law in the São Paulo 2nd Instance Court, as well as in the STJ and STF (see below), from May 2024 to August 2024 given that the STF Sura v. Cargolux written decision was published at the end of April 2024. Finally, in four decisions it was held that MC99 should not be applied because the Convention applies only to consumer claims, with the court relying on the principle established in the 2017 STF landmark judgments. This ignores the more recent STF judgment in Sura v. Cargolux, which clarified that the approach formed in 2017 should also encompass disputes arising from the carriage of cargo by air. 

The position at the STJ and the STF

The STJ and STF are Brazil’s highest courts, with the former analysing cases involving potential breaches of federal laws (such as MC99 once internalised in the Brazilian legal system) and the latter addressing breaches of Brazil’s Federal Constitution.

The STJ has ruled in 5 cases. In three of them it determined that the case should be retried by the 2nd instance court pursuant to MC99. Of these three cases:

• one awaits judgment by the São Paulo 2nd instance court; 
• another was judged incorrectly as the court found that there had been a declaration of value through the invoices. A further appeal has been lodged to the STJ and a decision is awaited; and
• in the third case, the São Paulo 2nd instance court applied MC99 as ordered by the STJ but ignored the cargo liability limits. Another appeal to the STJ was lodged with a successful outcome to apply the MC99 limits.

The STF has since issued 13 decisions handed down by different individual justices.

Only two of them (including a recent judgement of October 2024) decided against the application of the international conventions because, according to the justices in charge of these cases, the principle established by the STF in 2017 applies only to claims involving the carriage of passengers and baggage.

Recently, two STF cases were heard by multi-judge panels and decided in line with the Sura v. Cargolux cargo claim precedent. The fact that the position in the STF is not uniform leaves open the possibility of the analysis by the STF of its diverging case law and a change in the majority decision reached in the Sura v. Cargolux case. However, given that seven out of ten STF justices decided in favour of applying MC99 to cargo claims, we believe that, at this stage, a change in the position of the STF is unlikely to happen.

Conclusion

Overall, the case law in the STJ and STF is positive but there are still dissenting decisions in the lower courts, which do not adequately apply MC99 limits to cargo claims. Statistically, most cases end at the 2nd instance courts, as only a small percentage are granted leave to appeal to the STJ and the STF. The majority of the STJ and STF case law correctly applies MC99 and should serve as a guide to the lower courts. Therefore, it is still worrying that more than half of the São Paulo Court of Appeal decisions either do not apply MC99 at all or apply it incorrectly. In our view, there is still much for the lower courts to learn when it comes to understanding international aviation conventions and accepting their application as opposed to those more familiar Brazilian laws, such as the Consumer Defence Code and the Civil Code.