The Aviation Law Review: Russia
In Russia, aviation is regulated by various federal bodies including the Ministry of Transport, the Federal Air Transport Agency, the Federal Service for Transport Supervision, the Ministry of Defence, the Federal Air Navigation Service and the Interstate Aviation Committee (IAC).
The Ministry of Defence regulates the use of airspace while the other bodies have executive powers in the aviation sector: the Ministry of Transport develops aviation state policies and legal regulations; the Federal Agency of Air Transport is responsible for the registration and certification of airports; and the Federal Service for Transport Supervision deals with aero-navigational services, registration of aircraft and other services.
Some of the functions of the IAC (which have recently been substantially reduced – see Section IV) are monitoring flight safety, investigating accidents and issuing accident reports. Furthermore, the IAC compiles statistics on accidents and incidents involving passenger, military, transport and corporate aircraft.
Aviation law in Russia comprises the Air Code of the Russian Federation 1997 (the Air Code) as amended, the Civil Code of the Russian Federation 1994 (the Civil Code) and extensive subordinate legislation.
Legal framework for liability
i International carriage
Under Russian law, international treaties to which Russia is a party are deemed to be an integral part of the Russian legal system. Russia is a party to the Warsaw Convention 1929 and the Hague Protocol 1955.
On 3 April 2017, Russia ratified the Montreal Convention 1999 through Federal Law No. 52-FZ on the accession of the Russian Federation to the Convention for the Unification of Certain Rules for International Air Carriage, which came into force in August 2017 and marks the beginning of substantial change. However, the ratification was subject to the right not to apply the terms of the Montreal Convention to non-commercial international air carriage and transportation for military purposes. Despite this, joining the Montreal Convention will ensure that there are equal conditions for air carriers and legal certainty for those using their services.
In particular, there will be substantial changes to the limits of liability, which will exponentially increase the value in roubles for the limits to cargo claims. The financial unit of damages will now be special drawing rights (SDR).
While the upper limit of liability for damage has increased, accession to the Montreal Convention will also allow Russian carriers to avoid certain liabilities, if it can be successfully argued that an act or omission of the passenger contributed to the damage. There is also a provision in the Montreal Convention that exempts carriers from liability for death of a passenger that exceeds 113,000 SDR if it can be demonstrated that the damage was solely a result of third-party actions, or the harm was not caused by the negligence or improper actions of the carrier or its employees.
The amendments to the Air Code came into force on 27 May 2018, which led to the revision of the Air Code in accordance with the Montreal Convention. In addition, the concept of air transportation was clarified in the Air Code, and amendments were also made to the regulations on the use of shipping documentation in electronic form.
There were other amendments to the Air Code in 2018 that came into force, which establish the procedure for maintaining a blacklist of passengers who may be denied air transportation. These provisions establish the procedure for entry of passengers in a special register who violated public order during transportation, as well as the term for such passengers to be in the register (one year). A carrier may refuse to transport a passenger who is included in such a register. The passenger may appeal this decision in court. These provisions are aimed at reducing in-flight brawlers. The laws concerning domestic carriage remain out of the scope of the Montreal Convention and, as such, will need to be addressed by Russian law.
ii Internal and other non-convention carriage
Domestic contracts of carriage are governed by the Air Code and the Civil Code. From 1 January 2013 new legal instruments were enforced in Russia on the compensation of damages in death and personal injury cases (see Section VI.iv).
iii General aviation regulation
See Section II.ii. There are no separate provisions governing liability of operators of helicopters, and light and ultralight aircraft. On 30 March 2016, the Federal Law on introducing amendments to the Air Code of the Russian Federation regarding the use of unmanned aerial vehicles came into force. The Law regulates the use of drones and aims to increase the general level of aviation security.
iv Passenger rights
The General Rules of Air Carriage of Passengers, Baggage, Freight and Requirements to Servicing Passengers, Shippers, Consignees of 2007, last amended in 2016 (the Rules), are applicable both to domestic and international flights of Russian operators.
Under the Rules, in cases of delay or cancellation of flights in certain circumstances passengers are entitled to a range of services including accommodation, food, and transfers to and from the airport. The Rules also deal with carriage of minors and disabled passengers.
Passenger rights have been widened by Russia's accession to the Montreal Convention. Notably, passengers will be able to make a claim for damage, injury or death before a court in a Montreal Convention Member State where the passenger is domiciled provided that the carrier has an office in and a connection to that country.
Licensing of operations
i Licensed activities
Under the Air Code, commercial flights, development, manufacture, repair and testing of aviation equipment requires mandatory licensing. This includes drones weighing more than 30kg.
The licensing requirements for the carriage of passengers, baggage and cargo are set out in the Air Code and numerous federal laws. The body responsible for the licensing of certified commercial operators is the Federal Air Transport Agency of Russia. The application for a licence should contain a prescribed list of documentation including confirmation of the identity of the applicant, a list of intended services, copies of operator's certificates and confirmation of the payment for the licence.
Two types of commercial operator licences have recently been introduced by the Federal Aviation Rules: licences for commercial air carriage of passengers and freight, and licences for aviation works. As at May 2019, there were 104 registered commercial operators and as at March 2019 there were 210 registered aviation works operators.
On 28 November 2015, the government issued Decree No. 1283, relieving the IAC of its authority to carry out aircraft type certification.
Such authority will now be vested in the Federal Air Transportation Agency.
Further, the government redistributed other powers including certification for aircraft design, engines, propellers and airfields to other federal executive authorities including the Ministry of Transport, Ministry of Industry and Trade, and the Federal Air Transport Agency, although the new scheme is not yet clear. The IAC has been certifying aircraft and aerodromes since 1994 and the change is seen as a positive move by the government. From 5 July 2018, drones weighing from 0.25kg to 30kg have to be registered with the Federal Air Transport Agency of Russia.
ii Ownership rules
Russian law imposes certain limitations on foreign participation in Russian companies operating in the aviation sector. According to the Air Code, aviation enterprise may be established only if the share of foreign capital does not exceed 49 per cent of its charter capital, its manager and executive officers are citizens of Russia, and the number of foreign citizens in the governing body of the operator does not exceed one-third of the composition of the governing body.
The participation share of foreign capital in an existing company established before 10 April 2012, engaged in maintenance and repair of aircraft or parts (other than line maintenance and similar maintenance services undertaken by the airlines, their agents or contractors), may not exceed 25 per cent. Prior approval of the Government Commission for Control over Foreign Investments in the Russian Federation is required in relation to establishment or acquisition of a participation share exceeding 25 per cent or more of the charter capital of a company engaged in development, production, testing and repair of aircraft and aircraft equipment or aircraft safety control; and post factum notice to the Government Commission is required in relation to establishment or acquisition of a participation share exceeding 5 per cent or more of the charter capital of a company engaged in development, production, testing and repair of the aircraft and aircraft equipment or aircraft safety control.
iii Foreign carriers
Flights of foreign aircraft to or from Russia are effected on the basis of international treaties between Russia and the respective states, or on the basis of permissions issued by the Federal Air Transport Agency.
The foreign carrier effecting such flights should, inter alia:
- comply with the relevant laws and rules of Russia, and conditions for effecting international carriages;
- not have any indebtedness for the aero-navigational services rendered in Russia;
- ensure availability of necessary documentation on board, as established for international flights, by complying with the aviation standards recognised by Russia; and
- obtain insurance of other security regarding liability for causing harm to third parties and aircraft.
To gain authorisation to operate flights to and from Russia, foreign-registered operators must obtain flight permits from the Federal Air Transport Agency.
On 8 July 2015, Resolution of the Government No. 138 introduced amendments to the Federal Rules on Using the Russian Airspace. One of the aims of the Resolution is to expand the opportunities for using Russian air space. From 14 February 2017, the Ministry of Transport will be responsible for regulating the airdromes of Russia.
Owing to the vast air traffic that will be generated by Russia hosting the World Cup, Russia has permitted foreign carriers to operate domestic services. However, this is subject to Russian carriers being unable to fulfil demand.
Safety and security
Russia is a party to the Chicago Convention 1944 and therefore complies with the safety standards as set out in the Convention and its annexes. Safety requirements for operators in Russia are set out in the Air Code and in the extensive Federal Aviation Rules.
The Air Code provides that no aircraft shall be operated in Russia unless it has a valid certificate issued by the designated aviation authorities. The Federal Aviation Rules on certification of the commercial operators stipulate mandatory conditions with which the operator has to comply when applying for the certificate. These include the following:
- ensuring the continual airworthiness of the aircraft;
- collecting and analysing data related to safety of the equipment and the flights;
- ensuring personnel are qualified and certified to undertake particular duties as well as ensuring there is constant professional training of its employees, increasing their qualifications; and
- having sufficient financial and equipment resources to ensure safe operation and maintenance of the airworthiness of the aircraft.
Russia has had a chequered history in terms of safety, partially owing to the sheer increase in flights. In April 2018, a routine domestic flight from Moscow to Orsk, crashed four minutes after take-off, killing 65 passengers and six crew members. This crash is symptomatic of a dearth of qualified personnel and extreme weather conditions.
Pilot training is under the control of the state, and the federal transport programme for 2010 to 2015 included substantial investment in pilot academies. In a major U-turn from previous policies, the state training academies recognised the need to train pilots for Western-built aircraft.
Given the serious shortage of qualified pilots, Russian aviation authorities have agreed to allow local carriers to employ foreign pilots. On 21 July 2014 the amendments to Article 56 of the Air Code of the Russian Federation pursuant to Federal Law No. 73-FZ of 20 April 2014 came into force. Under the new law the airlines can hire foreign pilots over the next five years. Federal Law No. 87-FZ of 1 April 2020 extended the recruitment of new foreign aircrew for 10 years. There is an initiative to repeal the amendments of 2014 that is not supported by Russian airlines.
While the big Russian airlines such as Aeroflot and S7 Airlines have ameliorated their safety procedures in 2018, by achieving global standards, smaller carriers are still faced with the task of exponentially improving their safety in order to continue servicing one of the world's biggest nations.
New legal developments in 2015 included the new law regulating the use of drones, which aims to increase the general level of aviation security (see Section II.ii).
The July 2015 Resolution of the Government No. 138 aims to increase flight safety and bring the Federal Rules on the Use of the Air Space of the Russian Federation in conformity with the standards and recommended practices of the ICAO.
A legal initiative published in 2017 (60-FZ), which introduced changes to the Criminal Code ensuring that individuals are liable for gross violations of public order while on board, has been clarified over the past year. In 2017, a passenger was given a custodial sentence for smoking on board an aircraft, and there have been more examples in 2018, as part of a wider attempt to safeguard passengers while on board aircraft.
In February 2018, the Federal Air Transport Association of Russia signed an agreement with the European Aviation Safety Agency, with the ultimate goal of improving Russia's airworthiness regulation and ensuring fewer catastrophic injuries occur. In order to achieve this goal, the Federal Air Transport Association and the European Aviation Safety Agency will promote the exporting of Russian-built aircraft to foreign markets. Following in the same vein, Russia and Turkey bilaterally signed an agreement for the mutual recognition of aircraft certificates, in order to ameliorate aircraft worthiness.
Following the passenger cruise accident in the Volga River in July 2011, when a tourist boat sank killing 128 people, the Russian legislature decided to review current legal provisions relating to an operator's liability. On 25 May 2012, the State Duma approved a law on obligatory liability insurance for carriers for life, health and property of passengers, which was enforced on 1 January 2013 and affects, among others, aviation operators.
The main mandatory types of liability insurance applicable to the aviation operators are third party, crew, passengers, consignees and cargo owners.
The obligatory requirements of cover in terms of the passenger liability are as follows:
- death: up to 2.025 million roubles per passenger;
- personal injury: up to 2 million roubles per passenger;
- baggage: up to 600 roubles per kilo; and
- personal belongings: up to 11,000 roubles per passenger.
On 23 May 2016, Article 132(2) of the Air Code was amended. The amended provision increases the minimum insurance for each cabin crew to 1 million roubles.
Compliance with the above requirements is controlled by the Federal Service for Transport Supervision. The carrier is under obligation to provide full information as to its insurance for passengers including the contact details of its insurer together with the details of its insurance agreement. There are no exemptions from the obligatory insurance requirements.
Recent modifications to Russian insurance law have resulted in the introduction of a mandatory reservation of up to 10 per cent of the reinsured risks under the vast majority of reinsurance policies created by Russian insurers.
Pursuant to the Montreal Convention, carriers are obligated to take up insurance towards passengers and cargo owners.
i Structure of Russian competition law
Competition law in Russia is established by the Constitution of the Russian Federation as amended in 2008, by primary legislation and by the Criminal and Administrative Codes.
The Constitution guarantees shared economic space, free transfer of goods and services, support of competition and freedom of economic activity, and prohibits economic activity aimed at monopolisation and unfair competition.
The legislation comprises:
- the Federal Law on Protection of Competition dated 26 July 2006, last amended in March 2020, FZ-33, which came into force on 12 March 2020;
- the Federal Law on Natural Monopolies dated 17 August 1995, FZ-147, last amended in October 2015, FZ-275, which came into force on 5 January 2016;
- the Federal Law on Foreign Investments in Companies having Strategic Importance dated 29 April 2008, as most recently amended in July 2017, FZ-165, which came into force on 30 July 2017;
- the Code on Administrative Offences of the Russian Federation, dated 30 December 2001, as most recently amended in April 2020, FZ-99, which came into force on 1 April 2020; and
- the Criminal Code of the Russian Federation, dated 13 June 1996, as amended in April 2020, FZ-112, which came into force on 7 April 2020.
Russian competition law is enforced by the Federal Antimonopoly Service (FAS) and its local bodies. It applies to individuals, corporations (both public and private), federal, regional and local governmental authorities and the Central Bank of Russia.
Most of the competition rules applicable to aviation are not specific to aviation. However, the Law on Foreign Investments in Companies of Strategic Importance applies to some aviation enterprises including aviation organisations involved in the development, production, testing, operation and repair of aircraft and aircraft equipment, as well as aviation safety control.
ii Substantive competition rules
Competition law in Russia covers cartels, other anticompetitive agreements, the abuse of a dominant position, and merger control.
In 2015 a number of changes were made to the antimonopoly legislation in Russia, the most significant being the 'Fourth Antimonopoly Package'. The Fourth Antimonopoly Package changed the rules about obtaining prior consent of the FAS to a number of transactions, abuse of dominance and entry into anticompetitive agreements as well as rules governing unfair competition.
In January 2012, important amendments to Russian competition law (the Federal Law on Protection of Competition dated 26 July 2006, as most recently amended in March 2020, FZ-33) were enacted. These affect the laws prohibiting cartels. One of the significant changes was the introduction of the definition of a cartel being a horizontal agreement between competitors that leads or may lead to:
- fixing or maintaining of prices, discounts, bonus payments or surcharges;
- division of market by territory, volume of sales and purchases, assortment of goods and services, or range of sellers or purchasers;
- reduction or termination of production of goods;
- refusal to enter into a contract with a particular customer or seller; or
- increasing, reducing or maintaining prices on tenders.
The cartel prohibition has both an administrative and criminal nature. Under Article 178 of the Criminal Code there is a criminal liability for individuals that arises when a cartel causes a loss that either exceeds 10 million roubles or derives illegal income of over 50 million roubles.
On 25 May 2012, procedural rules for FAS inspections of compliance with competition law have been published (FAS Decree No. 340 dated 25 May 2012, as most recently amended in May 2017). Under these rules, in certain circumstances the FAS is permitted to conduct unannounced inspections where the FAS can be accompanied by prosecution agencies.
Before the adoption of the Fourth Antimonopoly Package, a prohibited cartel was a written or oral agreement between seller companies leading or capable of leading to the setting or maintaining of prices, division of the market or other negative consequences. The Fourth Antimonopoly Package expands the application of the cartel prohibition to agreements between purchasers as well.
On 20 March 2015, Federal Law No. 45-FZ dated 8 March 2015 made a number of amendments to Article 178 of the Criminal Code of the Russian Federation. Under the new Law, abuse of dominance has been decriminalised and there will only be criminal liability for competing business entities that use a cartel to restrict competition.
iv Abuse of a dominant position and monopolistic prices
Rules on 'monopolistic prices' were introduced into the Law on Protection of Competition in 2009, with further amendments enacted in July 2012, FZ-132. Any price increase or decrease by a dominant company will now be subject to a set of restrictions and conditions. Even maintaining prices at the same level can be considered a violation if conditions exist for their reduction.
In 2012, five airlines were investigated by the FAS for abusing their dominant position and charging excessive prices on a particular route, and two were fined. One airport was fined for overcharging operators for fuel and abusing its dominant position. Another airport was investigated by the FAS for discrimination against non-Russian airlines, where it was charging them 45 per cent more for ground handling services; it was ordered to treat all operators equally.
Predatory pricing in Russia is defined for goods as a 'monopolistically low commodity price' and for financial services as 'unjustifiable low prices'. Article 7 of Law No. 135 on the Protection of Competition prohibits a dominant firm from setting a price that is lower than the sum of expenses necessary for production and sale of the commodity. There have so far been no reported cases of predatory pricing in the aviation sector.
v Merger control
Mergers and acquisitions are subject to the Russian merger control rules contained in the Russian Law on Protection of Competition dated October 2006, as amended. Merging parties subject to these rules are required to seek and obtain approval prior to an acquisition from the FAS.
Further to the introduction of the Fourth Antimonopoly Package, joint venture agreements will be subject to merger clearance by the FAS if the aggregate book value of assets of the parties entering into such agreements (or assets of their groups of persons) exceeds 7 billion roubles or the aggregate book value of their annual turnover exceeds 10 billion roubles.
Should companies fail to seek and obtain prior approval, sanctions will be stringently applied. The FAS can apply to invalidate, either partially or entirely, transactions for which prior authorisation was required but not obtained. The FAS also has the power to liquidate companies incorporated without the necessary approval. Despite having these powers, the FAS rarely exercise them.
vi Natural monopolies
The tariffs of natural monopolies (including the airports), are determined by the Federal Tariff Service, which maintains a registry of natural monopolies. Mergers between the natural monopolies are governed by Law 147-FZ of 17 August 1995 (amendments came into force in 2016).
The management board of the FAS has considered changes in the regulation of natural monopolies' activities at the airports in Moscow and the Moscow region, and made a decision to abandon the regulation of prices in the markets of airport services across the Moscow air hub.
vii Governmental initiatives
The Russian aviation sector is currently experiencing various problems. Twenty years ago the regional and local airports serviced 75 per cent of the passenger traffic in Russia and now the Moscow hub serves 80 per cent of all of the traffic, leaving just a 20 per cent share for the regional and local airports. The level of competition is high within the Moscow hub as there are five or more airlines operating on the same routes. However, on the regional and in particular local routes there will usually be only one or two carriers operating, which consequently results in a high cost of carriage.
In over 20 years, the number of airports in Russia has decreased by over 80 per cent (1,302 in 1992 compared with 228 in 2014) and this has had an impact on the number of regional and local carriers. By way of example, in 1992 there were 4,780 scheduled routes connecting 432 cities, but in 2011 there were just 834 routes connecting 202 cities. The airport infrastructure is in desperate need of modernisation. The Russian aviation authorities are trying to resolve this by inviting private investors to finance various projects aimed at developing the airports as well as various subsidies. Competition among the ground-handling companies has not substantially increased, resulting in high costs of services. Slot allocation remains an issue where both airports and operators refuse to allow new carriers to share the slots. To resolve this problem and other issues and to ensure the development of service providers in the airports, the FAS has developed Rules 599 dated 22 July 2009 on providing access to services of the natural monopolies in the airports. Further amendments have been developed by the FAS to the Rules, which are currently being considered by the relevant authorities.
Furthermore, the Russian government developed a number of initiatives, and issued the following documents:
- a list of measures dealing with lowering the costs of domestic flights (No. 395p-P9 dated 31 January 2013);
- a list of measures on developing competition and optimising antimonopoly policy (No. 2579 dated 28 December 2012, now expired); and
- measures on developing regional flights (AD-P9-7212 dated 27 November 2012).
These documents are aimed at developing competition in the airports, encouraging the development and competition of regional aviation, creating conditions for the formation of low-cost carriers, and optimising the tariff system of airport service providers.
The government is trying to provide the necessary support to the aviation industry by way of various initiatives and subsidies. In 2012, a payment of 2 billion roubles was made by direct subsidies to partially reimburse the lease payments of the regional operators. State subsidies were paid to the state-owned airport companies in Siberia and the far east of Russia. State-owned leasing companies are becoming more actively involved in the regional aviation sector. Customs duties were waived for passenger aircraft with up to 50 seats and a further waiver is expected for passenger aircraft with up to 75 seats. Regional airlines are planning to further expand their business with the help of state subsidies. The government assists Russian operators financially with leasing Russian-built aircraft.
In order to benefit from reduced withholding tax rates under any applicable double tax treaty, a foreign entity that has a source of income in Russia will need to provide its Russian agent with a statement confirming its beneficial ownership right to said income. A confirmation of its tax residency will also be required and this must be certified by the relevant foreign state authority. Both documents must be provided before the due date of payment of the taxable lease income. If the tax agent fails to receive this documentation, it is legally bound to withhold from the payment tax at the rate applicable under Russian domestic law, otherwise the lessee is open to incurring substantial fines and late payment interest.
A number of state-financed infrastructure projects have been undertaken in Russia in the past few years, including a new runway at Mineralnye Vody Airport, passenger terminals in the airports of Yakutsk, Vladivostok, Samara and Simferopol, and air traffic control centres in Kaliningrad and Khabarovsk.
In a bid to improve air connectivity within Russia, with an ultimate goal of creating a nationwide, regional carrier, Russia has introduced a bill that seeks to introduce zero value added tax for flights to the far east of Russia and back. This bill fits in to a wider context of Russia endeavouring to facilitate air travel within the country.
See Section VIII.iv.
Establishing liability and settlement
Under the Aviation and Civil Codes a claim for compensatory damages can be brought against the operator and against the insurer of the operator. The limitation period for issuing proceedings against the insurer is three years. However, there is no time bar on bringing a claim against the operator.
Settlement agreements are unenforceable under Russian law and court approval of any settlement in a case involving death is recommended. Multiparty cases involving multiple defendants are allowed and encouraged under Russian procedural legislation. Proceedings can be brought against all of the above-mentioned parties; however, in practice and to date claims have only been brought against the operator and its insurer.
ii Carriers' liability towards passengers and third parties
Under the Air and Civil Codes, a carrier is automatically liable for damages arising from death or bodily injury occurring during the course of carriage by air. There is no limitation of liability, and damages are subject to proof of loss (death).
iii Product liability
The Law on Protection of the Rights of Consumers governs the liability of manufacturers in Russia. The major international carriers in Russia that transport the majority of passengers use predominantly Western-built aircraft. The Russian Soviet-era aircraft are mainly used by the smaller carriers. There were no known claims against manufacturers of Russian-built aircraft by the operators for a number of reasons. Until recently, product liability insurance simply did not exist, so there was not much point even considering a recourse to the manufacturers, who would not be financially viable in any event. Additionally, the recent tendency of the Russian authorities following a major loss has simply been to shut down the airline, which again keeps the manufacturers out of the courts.
Amendments have been made to the Code of Administrative Offences of the Russian Federation that have established liability for failure to take product recall measures. Measures will include but will not be limited to the following: informing the relevant authorities about the deviation from product requirements; taking active measures to prevent harm as a result of the product defect; and suspending the production and sales of the defective product, and ultimately recalling the product from the market if necessary.
Assessment of damages in cases involving death is carried out in accordance with the Civil Code, which provides that the main categories of damages to be compensated are material (economic) damages, moral damages and funeral expenses.
In death cases, material damages for loss of support in cases of dependency are calculated on the basis of the income of the deceased and the number of dependants. Moral damages compensate for pain and suffering of the claimant and are awarded at the discretion of the court. Courts making a decision in this regard would take into account any aggravating circumstances. As to funeral expenses, the maximum payment in this regard amounts to 25,000 roubles. Under the Montreal Convention, carrier liability for a passenger's death remains capped at 9 million roubles, and it is only possible to exceed this limit if it can be proved that the accident was a result of the carrier's negligence.
The amendments to the Air Code and Law FZ-67, which was enforced from 1 January 2013, provides that in death cases a carrier or its insurer shall pay within the 30 days following the receipt of all the prescribed documents the amount of 2.025 million roubles by way of compensation on account of damages due.
Furthermore, from 1 January 2013 the interim payments of 100,000 roubles became obligatory if requested and are to be paid by the operator or its insurer within three days of receipt of the application supported by the prescribed documentation.
The Air Code provides that if the damages, determined according to the Civil Code, are more than 2.025 million roubles, then payment of the sum of 2.025 million roubles does not release the carrier from the obligation to make additional payments until the claimants are fully compensated.
The average amount of damages for death of a passenger in Russia is 10 million roubles.
All employed Russian citizens are subject to obligatory state social insurance. In the event of an insured accident taking place (e.g., temporary or permanent professional disability) the Social Insurance Fund is obliged to fix temporary disability pay, which is usually equal to 100 per cent of the victim's salary.
In cases where a deceased passenger was travelling on business, material damages will have to be paid by the Social Insurance Fund. Where a deceased passenger was an employee of the police, prosecutor's offices, military personnel or of the Federal Security Service of the Russian Federation, the compensation is to be paid by an insurance company in accordance with certain procedures established by the Federal Law on Obligatory Life and Health Insurance of the Military Personnel Citizens Drafted to Periodical Military Training, the Rank and File and Officers of the Internal Affairs Bodies, State Fire Fighting Service, Drug Control Agency, Employees of Penal Institutions and Bodies and Employees of Federal Bodies of the Tax Police. Damages awarded in respect of the above-mentioned categories of persons shall be paid within the deadline fixed by law, which is 30 days or 15 days depending on the applied statutory Acts, upon provision of the prescribed documentation. The above organisations are entitled to claim a refund of the paid amounts from the operator.
This is a grey area of law and in a number of aviation cases involving death double compensation is possible.
With regard to personal injury cases, from 1 January 2013 Resolution 1164 on Affirming Rules on Calculation of Insurance Compensation in Personal Injury Cases (the Compensation Rules) entered into force in Russia, introducing a new system of calculating damages. There are 70 main categories of injuries ranging from skull damage to food poisoning, and over 100 subcategories. Each and every type of injury is specifically allocated a percentage rate, which varies from 0.1 per cent for bruises up to 75 per cent for spinal cord injury.
In accordance with the Compensation Rules, the insurance compensation payable to injured passengers has to be calculated by multiplying the insurance sum that is specified per passenger in the agreement on the obligatory insurance (2 million roubles) by the percentage allocated for a particular injury.
By way of example and taking the above in consideration, injury to the spinal cord would attract compensation of 1.5 million roubles (75 per cent of 2 million roubles). Should the costs for the damage incurred by the injured passenger be higher than the obligatory compensation, then the full amount is to be compensated as damages.
As a corollary of ratifying the Montreal Convention, passengers, who can establish liability subject to the Convention, are now able to claim against Russian carriers for fixed compensation dependent on the liability. The upper limit of compensation for damages for each passenger is now significantly higher than under the Warsaw Convention, with a limit of up to 113,000 SDR.
To the best of our knowledge, there are no voluntary reporting initiatives in Russia.
The year in review
The most notable and tangible change to Russian aviation law has been the accession to the Montreal Convention, and the Russian aviation industry will continue to feel the effects of this decision in the years to come.
The aviation industry continued to grow in 2019, resulting in a sharp increase in air traffic. Russian policy and government initiatives have been focused on establishing a comprehensive Russian carrier and ameliorating the air worthiness of its aircraft, both for domestic flights and for international exports. This has led to the establishment of various Russian airlines, which will ultimately increase accessibility to air travel and provide a boost to the Russian economy.
The US and EU sanctions introduced as a result of Crimea joining Russia continue to affect the Russian aviation industry.
A noticeable decrease in the number of Western-built aircraft continues. As a result of the sanctions, rouble devaluation and decline in the price of oil, Russian airlines can no longer afford new acquisitions. Many aircraft had to be returned to the leasing companies because the Russian airlines can no longer afford the lease payments.
Russian manufacturing projects are gaining more support from the government. Russia is looking to resurrect its production of civilian aircraft, including the Sukhoi Superjet 100 and the Ilyushin II–114, and Russian carriers are encouraged to support Russian manufacturers. In June 2016, Russia unveiled a medium-range passenger aircraft – MC-21 – that Russian state media hailed as superior in many ways to Western-built aircraft.
On 28 May 2017, the maiden flight of Irkut MC-21-300 airliner was successfully completed. The prototype took flight from Irkutsk Aviation Plant airfield in Siberia about 2,600 miles east of Moscow.
Whether the safety initiatives will successfully change the perception of Russian air safety remains to be seen, but the government will continue to make concerted efforts to achieve this.
1 Alexandra Rodina is a partner at Kennedys Law LLP.