European Court dismisses British Airways case against Serbia

The European Court of Human Rights has ruled to dismiss a British Airways lawsuit against Serbia for full damages resulting from a mid-air collision in 1976 near Zagreb in Croatia. On September 10, 1976, a British Airways Trident jet, en route between London and Istanbul, collided mid-air with an Inex-Adria DC-9 operating between Split and Cologne. All 176 people on board the two aircraft were killed. It was later established that the collision was the result of an error on the part of air traffic controllers in Zagreb, the capital of the then Socialist Republic of Croatia, one of the six constituent republics of the Socialist Federal Republic of Yugoslavia (“the SFRY”). On September 9, 1979, British Airways lodged claims for compensation against the SFRY with the Belgrade Commercial Court. An insurance company, Dunav Insurance (Dunav Osiguranje), lodged compensation claims on behalf of Inex-Adria Airways. The court adjourned the hearing of British Airways’ case on several occasions pending the resolution of succession issues resulting from dissolution of the SFRY in 1991 and subsequently the dissolution of the State Union of Serbia and Montenegro in 2006.

On October 18, 2000, the Belgrade Commercial Court granted Dunav Insurance’s claim for damages with interest and costs. The relevant judgment was upheld by the Commercial Court of Appeal and the Supreme Court of Serbia on December 17, 2001, and July 2, 2003, respectively. The respondent party was the Federal Republic of Yugoslavia, as the sole legal successor to the SFRY. On June 16, 2011, the Belgrade Commercial Court granted British Airways’ claims, awarding damages, interest and costs to be paid by Serbia, which the court considered to be the legal successor to the SFRY. The government appealed. On October 24, 2011, the Commercial Court of Appeal upheld the judgment from June 16, 2011 regarding the principal debt, but it recalculated the interest as of the date of the judgment given by the court at first level of jurisdiction. Both parties asked for a review of the judgment.

On November 8, 2012, the Supreme Court of Cassation of the Republic of Serbia declared inadmissible the appeal on points of law lodged by British Airways, referring to the statutory provision requiring the amount sought to exceed the counter value of 300.000 euros. It examined the merits of the appeal on points of laws from Serbia and concluded that Serbia could only be held liable, in regard to British Airways’ claims for compensation resulting from the damage caused by the SFRY, for a 35.77% share, as per the Agreement on Succession Issues that entered into force on June 2, 2004, and accordingly reduced the amounts awarded to British Airways.

On July 30, 2013, British Airways lodged an appeal with the Constitutional Court of Serbia, alleging a violation of the constitutional rights to a hearing within reasonable time, a fair hearing, compensation, property, and the equal protection of rights and prohibition against discrimination. On June 3, 2016, the Constitutional Court of Serbia acknowledged a violation of British Airways’ right to a hearing within a reasonable time and dismissed the remainder of the complaints. British Airways had complained that it had been unable to obtain full compensation of damages. It alleged the domestic courts’ decisions to grant its claims for damages in part had been arbitrary, inadequately reasoned and discriminatory.

In August 2021, British Airways filed a complaint with the European Court of Human Rights over the case. After three years, the court has made a decision, ruling, “The proceedings in the applicant company’s [British Airways] case were instituted against the SFRY, which dissolution in 1991 left multiple legal questions, including allocation of debt and liability of the SFRY unresolved. After the Succession Agreement of 2004 which settled the issue of liability between the successor states, the proceedings were resumed against Serbia, being the only respondent party. In the Court’s view, it should have been known to the applicant company that Serbian courts were competent to decide its case only in so far as Serbia’s liability was concerned. Furthermore, the applicant company did not refer to any legal provision in Serbian or international law that would justify its expectation to have its claim lodged initially against the SFRY granted in full. Nor did it demonstrate that Serbia had voluntarily accepted joint and several liability over the tort attributable to the SFRY. On the contrary, the Court notes, in this connection, that, as pointed out by the Supreme Court of Cassation, Serbia was only one of six successor states to the now dissolved SFRY. As regards the SFRY’s assets, the successor states determined their respective shares in the Succession Agreement they signed. They used the same principle when determining their respective liability, each assuming a share of the SFRY’s debts. In the present case, the domestic courts did no more than interpret and apply the Succession Agreement, in so far as Serbia was concerned, as the only respondent party, and the applicant did not submit anything that such an interpretation ran counter any established domestic practice. They held Serbia liable for its tortious acts and granted the applicant company’s claims in part, as per Serbia’s “equitable share” of the former SFRY’s tort obligations provided under the applicable regulation. Accordingly, the Court concludes that the applicant company could have no “legitimate expectation” of recovering full compensation for damage in its civil dispute against Serbia and that its claim, in the part concerning the amount of the compensation it was allegedly entitled to”.