As relatives of those who perished on Malaysia Airlines Flight MH370 struggle to cope with their loss, lawyers, insurance experts, family members and the airline are turning their attention to the question of compensation. According to several reports, Malaysia Airlines and Boeing will shell out millions of dollars in damages to the relatives of the 239 victims of Flight 370. But experts say that the amount each family will get paid will vary greatly depending on their country of origin and by where claims are brought.
There were 14 different nationalities represented on Flight 370. The majority of passengers, 152 of them, were Chinese. Three of the victims were American, 38 were Malaysian, seven were Indonesian and six were from Australia.
International law requires an airline that has sustained a crash in which there were injuries or deaths to pay each family roughly $176,000 in damages. That’s the bare minimum relatives receive. The agreement is stated under a 1999 treaty known as the Montreal Convention, which concerns compensation for victims of air disasters.
Families can sue the airline and the manufacturer of the plane for additional damages, but that’s where it gets complicated.
According to the Montreal Convention, claims against the airline or the manufacturers must be brought in one of five places. Families can sue in the country where the carrier is headquartered, the airline’s main place of business, where the passenger purchased his ticket, the destination of the flight or the primary residence of the plaintiff.
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“If a person is injured or killed in an aviation accident, a lawsuit may be brought to recover money damages from those responsible for causing the accident,” Rapoport Law Offices, located in Illinois, notes on its website. “Examples of parties that may be legally responsible for money damages in an airplane crash case include the pilots; the airline(s) involved; the owner of the aircraft; the manufacturer of the aircraft and its key parts; the aircraft maintenance provider; the government (for possible negligence by air traffic controllers and weather services); and airport operators.”
There is already at least one U.S.-based case against Malaysia Airlines and Boeing, according to the Malaysian Insider. Several families from China, Malaysia, the U.S. and Indonesia approached Chicago-based law firm Ribbeck Law Chartered to help them file a lawsuit against Boeing Co. and Malaysia Airlines under the premise that the plane went down due to mechanical failure.
"We believe that both defendants named are responsible for the disaster of flight MH370,” Monica Kelly, Ribbeck's head of Global Aviation Litigation, told The Malaysian Insider. "We expect to represent more than 50 percent of the families of passengers who were on board that flight. The families have accepted that the plane has crashed and they are ready to find out the real reason why this happened and this action is going to provide that information for them.”
Kelly said they will prove that a fault with the aircraft design caused the plane to crash.
Experts estimate that in U.S. court, Malaysia Airlines could end up paying between $8 million and $10 million per passenger. Compensation abroad, however could be just a fraction of that, according to CNBC.
"Compensation for loss of life is vastly different between U.S. passengers and non-U.S. passengers," Terry Rolfe, leader of the aviation practice at Integro Insurance Brokers in New York, told CNBC. "If the claim is brought in the U.S. courts, it's of significantly more value than if it's brought into any other court. And for U.S. citizens there is no problem getting into the U.S. courts."
Allianz, the primary insurer for Malaysia Airlines, has reportedly placed $110 million in an escrow account to make hardship payments to Flight 370 relatives, The Telegraph reports. Some attorneys say that in the end, the total compensation for each passenger could vary from $400,000 to $10 million.
"They're going to look at the earning potential of that deceased individual and the fact that he's got a wife and young kids that are going to need to be provided for a long time," Bradley Meinhardt, a managing director at risk management services firm Arthur J. Gallagher & Co., told CNN. "A single individual is going to be calculated differently."