MH370: Lack of proof raises payout issues

KUALA LUMPUR - The lack of any evidence indicating what caused Flight MH370's disappearance raises a legal conundrum that is expected to force Malaysia Airlines (MAS) into out-of-court settlements with angry next of kin, aviation law experts said.

Relatives of the 239 people on board can go after MAS because under international aviation law, it is an airline's responsibility to prove it was not to blame for an accident.

"On the surface, (Malaysia Airlines) is responsible," said Mr Jeremy Joseph, a Malaysian lawyer specialising in transport law. The "burden of proof" rests on the national carrier to clear its name, he added.

Under International Civil Aviation Organisation rules, next of kin in an air crash are entitled to an automatic minimum of about US$175,000 (S$218,000) per passenger, regardless of fault, payable by an airline's insurer.

However, MAS is also vulnerable to civil lawsuits for potentially greater damages by hundreds of relatives. The Beijing- bound plane disappeared on March 8 and is believed to have crashed in the Indian Ocean.

The size of any damages would depend on where lawsuits are filed. Next of kin can file in the country where an airline is based, where tickets were purchased, where passengers were headed or where they lived.

Since most passengers were from China or Malaysia, most cases could be filed in the two countries, where courts are more conservative in awarding damages than in countries like the United States.

Damages are typically based on the lost lifetime earnings of a victim and thus could total in the hundreds of millions for all passengers combined.

But legal experts said few cases will likely end up in court. They expect undisclosed out-of- court settlements between families and MAS and its lead insurer, German giant Allianz, which would bear the brunt of any payouts for MH370.

"Because of its unprecedented nature, the courts are going to look at (MH370) very carefully. That is something the airline will try to avoid unless settlement expectations from the victims' families are perceived by Malaysia Airlines as unreasonable," said Mr Joseph.

In the case of Air France Flight 447, which crashed in the Atlantic with 228 people aboard in June 2009, the airline's insurers made compensation payments to relatives. Only a small number of lawsuits were filed.