1. Presented by: Sean Gates, SeniorPartner Gates and Partners 20 St. Mary At Hill, London, EC3R 8EE Tel: +44 (0)20 7220 5950 Fax: +44 (0)20 72205951 www.gatesandpartners.com 9 December 2009 www.gatesandpartners.com Legal Developments

2. International legal developments of relevance to Russian carriers International legal developments affect Russian airlines on international routes May influence developments inside Russia Developments that start in one sector of the industry may inadvertently influence another Therefore they are important to the Russian carriers

3. The increasing trend to criminalization No news in Russia where instigated in most accidents involving substantial material damage (“signs of a crime”) BUT a recent development in the EU/ US with unpredictable consequences Applicable to a Russian airline on international carriage

4. Criminalisation Can affect anyone in aviation industry not just airlines – manufacturers, ATC Globalisation/terror impetus to international co-operation increases possibility extradition Concorde, Linate, Helios, GOL

5. Investigation Chicago Annex 13 Aim of investigation: “it is not the purpose of this activity to apportion blame or liability” Chicago Annex 13 s.12 “The State conducting the investigation of an accident or incident shall not make the following records available for purposes other than accident or incident investigation, unless the appropriate authority for the administration of justice in that State determines that their disclosure outweighs the adverse domestic and international impact such action may have on that or any future investigations”

6. Chicago Annex 13 s.12 Information “could be utilised inappropriately for subsequent criminal proceedings. If such information is distributed, it may, in the future, no longer be openly disclosed to investigations. Lack of access to such information would impede the investigation process and seriously affect flight safety.”

7. Preparation Safety Management System – documented Training - documented Insurance coverage for costs? Crisis Management System

8. If the worst happens Manage and calm media storm Support involved staff Participate in investigation Political lobbying – case specific and industy level

9. Practical Steps: Investigation Experience Involvement Expertise Lobby

10. Legal developments Denied Boarding Regulation Judgement in Sturgeon v. Condor and Bock v. Air France.

11. Legal developments Denied Boarding Regulation Wallentin-Hermann v Altitalia The fact that an air carrier had complied with the minimum rules on maintenance of an aircraft could not in itself suffice to establish that that carrier had taken “all reasonable measures”.

12. Legal developments FNC decisions Action against Cessna Aircraft Company brought in Florida by 69 European plaintiffs following the 2001 Linate accident failed. Action against McDonnell Douglas Helicopters, Inc brought in California by 3 injured pax following the MD600N helicopter crash in the Russian Federation failed.

13. Legal developments Terrorism Convention First tier : strict and limited liability of aircraft operators. The highest monetary limit is 700 million SDRs for aircraft with a mass greater than 500,000 kgs. Second tier for claims above this amount: the International Civil Aviation Compensation Fund (ICACF) will be set up. Contributions by each passenger, and in respect of each ton of cargo, at an amount to be agreed to by the Conference of Parties with a view to accumulating a further 3 billion SDRs Third tier for claims exceeding the combined total of the two above amounts: if operator is found guilty of intentional misconduct or recklessness with knowledge that damage would result, it have to pay any losses that exceed 3 billion SDRs.

14. Legal developments Defences to unlimited liability: i) operator has implemented an appropriate system for the selection and monitoring of employees; ii) operator has established a security system according to the provisions of the Chicago Convention. Subrogation options: i) ICACF against operator on the same terms and conditions of the Convention; ii) operator and/or ICACF against the terrorist and any “other persons” (such as ground handlers, airports, and air traffic controllers). The liability of “other persons” is limited to the amount for which they could have obtained insurance on a commercially reasonable basis. “Other persons” bear unlimited liability on proof of recklessness with knowledge of the other person.

15. Legal developments Owners, lessors and financiers are specifically exonerated from recourse, to the extent that they are not operators. Manufacturers are also excluded from recourse, if they can prove that the accident was caused – at least partially – by a product that complies with mandatory design obligations

16. Legal developments The Convention creates an exclusive remedy; claims can only be pursued in the Courts of the State where the damage was done. “Mental injury” will only be compensable under this Convention if caused by a recognisable psychiatric illness resulting from bodily injury or direct exposure to the likelihood of imminent death or bodily injury. Damage caused by nuclear incidents are substantially excluded. Punitive, exemplary, and other non compensatory damages are excluded. Two year limitation period.

17. Legal developments General Risks Convention No fund is established Limited liability is imposed on the operator with amounts analogous to the Terrorism Convention The operator has the right to prove that the accident was not due to its negligence Claims may be made against any other party responsible for the damage -- except for owners, lessors or financiers Damage caused by a nuclear incident is excluded The forum is exclusively the place where the damage occurs

18. Legal developments IATA standard ground handling agreement The limitation of liability clause is not always held valid by domestic courts Pure and “remote” consequential economic losses are not always excluded France and Greece favour broad recovery and include untracked losses that operators do not presently account for

19. Legal Developments Emissions Trading Scheme Under EU ETS Under Kyoto

20. Legal developments Thank you