MH17: Airline, insurers or governments – who will pay?

The Malaysia Airlines (MAS) MH17 plane crash in Ukraine last Thursday could lead to protracted legal disputes between the airline, insurers, governments and victims’ families, according to aviation insurance experts.

Those potentially liable to compensate victims’ families include MAS, governments and aviation authorities in Malaysia and Holland because they permitted a flight over a known war zone, experts say. The Russian or Ukrainian governments also could be liable if investigators find evidence that those behind the crash had state backing, reported the Wall Street Journal.

The case is complicated by the difficulty of proving who brought down the aircraft in a hotly contested conflict zone. MAS MH17 crashed in the battle-hit region of Donetsk in eastern Ukraine en route to Kuala Lumpur from Amsterdam. US intelligence agencies say the plane was struck by a ground-to-air missile.

“The difficulty facing Malaysia Airlines here is that the passengers could argue that most airlines…knew the Ukraine airspace was a war zone and that two other aircraft had been shot down the previous week,” Mr Kevin Bartlett, a partner in aviation law at Cooper Grace Ward Lawyers in Brisbane told the Wall Street Journal.

MAS has stated that the flight route had been declared safe by the International Civil Aviation Organisation (ICAO) and that the airspace the flight was in was not subject to restrictions by the International Air Transportation Association. Malaysian Transport Minister Liow Tiong Lai stressed that the airline took no undue risk in flying over Ukraine.

However, an ICAO spokesman, Mr Anthony Philbin, said: “ICAO does not declare airspace safe or unsafe or undertake any other direct operational responsibilities with respect to civilian air services.” He added: “It is always the responsibility of our sovereign member states to advise other states of potential safety hazards.”

Even so, it would be Allianz, MAS’s reinsurer, that is ultimately required to pay unless investigators determine who fired the missile that shot MH17 out of the air, or Russia or Ukraine assumes responsibility. In either of those scenarios, Allianz probably would pursue a right of subrogation, which means it would pay Malaysia Airlines for its liabilities, and the country responsible would be sued for those expenses, reported the Washington Post.

“I think that ultimately there will be a case filed by New York, Netherlands, and other countries, against either Ukraine or Russia,” said Mr Robert Clifford, an aviation accident lawyer.

Source: AIR eDaily