In summary
The aviation industry is the backbone of the travel industry – every day aeroplanes take off and land every few seconds, each carrying hundreds of passengers to foreign destinations. The players that make the industry thrive are diverse. States control airspace that airlines utilise, on aeroplanes manufactured using parts sourced from around the world. Then there are the services that bring each part together. The aviation industry is broad and complex, so it naturally gives rise to equally broad and complex disputes. This article discusses the use of arbitration and dispute resolution in the industry, and suggests that an increased use of mediation and inclusion of arbitration clauses across the industry would improve the efficiency of dispute resolution for parties in the aviation industry.
Discussion points
- The importance of international air travel in the tourism industry
- The wide array of disputes that fall under the aviation industry umbrella
- The use of arbitration and alternative dispute resolution in the aviation industry
- The future of alternative dispute resolution in the aviation industry
Referenced in this article
- Chicago Convention on International Civil Aviation of 1944
- Multilateral Agreement on the Liberalization of International Air Transportation
- In Re the Application of the Federative Republic of Brazil Relating to the Disagreement Arising under the Convention on International Civil Aviation done at Chicago on December 7, 1944
- Capital Sec Sys WLL v L-3 Communs Sec & Detection Sys
- Airtourist Holdings, LLC, et al v HNA Group, et al
- Smartsky Networks, LLC v Wireless Systems Solutions, LLC, DAG Wireless Ltd, DAG Wireless USA, LLC and others
Introduction
In an increasingly connected world, the air transportation industry has become a significant source of socio-economic growth and an important driver of economic development. Tourism is one sector in particular that marries the socio-cultural and economic significance of the aviation sector. As technology develops, interest in and accessibility to international travel has increased, leading to billions of people travelling internationally each year. Over the past quarter century, the number of international tourists traveling each year has nearly tripled, from 536 million in 1995 to 1.5 billion in 2019.[1] Though international tourism significantly declined during the covid-19 pandemic, it has steadily returned and is predicted to continue to increase.[2] In the first quarter of 2023, tourists traveling internationally reached 80 per cent of pre-pandemic levels, with an estimated 235 million tourists travelling internationally.[3] In addition to tourism-related travel continuing its ascent to pre-pandemic levels and beyond, the pandemic also created awareness of the business-leisure travel sector. The increased hybrid working model has led many destinations looking to boost their economies to turn to work-and-play tourism, further increasing international travel.[4]
No, this is not a puff piece for the travel industry (though we wouldn’t mind an upgrade on our next trips). Instead, this is the first of a series on international arbitration and the travel industry for the GAR Arbitration Review of the Americas. In this article, we focus on the aviation sector as it is the obvious starting point for the international travel industry. Aviation is a multifaceted industry that is vitally important to the world economy, providing 11.3 million direct jobs and contributing over US$960 billion to global GDP.[5] The disputes that arise in the sector are, inevitably, equally multifaceted and with broad reach. Indeed, the aviation industry (as far as we are concerned for purposes of this article) includes the companies that make air travel happen, such as aeroplane manufacturers, airport developers, airlines, airport services providers and designers of air traffic control technology.
With the many facets of the aviation industry comes many diverging and conflicting interests that often result in disputes. When it comes to dispute resolution, the aviation industry faces the challenge of being an inherently international industry with a wide span of agreements and transactions. Aviation is also a regulated industry and involves many state and state-owned entity participants. And with air travel continuing to increase, lasting effects of the pandemic impacting demand, supply chains and staffing issues, and new cyber threats, the number and complexity of disputes that fall under the aviation industry umbrella will continue to increase as well.
Of course, not all aviation disputes are cross-border, but we focus here on international dispute resolution in the aviation industry, particularly in the Americas. Aviation disputes are resolved through domestic courts, commercial arbitration, investment treaty arbitration, state-state treaty arbitration or other forms of alternative dispute resolution. What follows is a survey of select cases that demonstrate the types of disputes encountered in the industry and our suggestions for the increased use of alternative dispute resolution to facilitate efficient and effective outcomes in an industry that always seems to be taking off.
Disputes in the international aviation industry
Aviation is a regulated industry. This makes sense given its importance to national defence, its inherent cross-border nature and the possibility (though rare) for disastrous accidents. The industry is governed by domestic laws and regulations that address the specificities of the industry on a domestic level.[6] At the international level, it is treaties, bilateral agreements and multilateral agreements that govern. Aviation law covers not only duties and rights with respect to air travel, but also encompasses the wide array of commercial transactions necessary to make air travel possible. As a result, disputes in the aviation industry are often as complex as the planes the industry runs on and touch on issues of aviation law, international law and commercial law, all the while influenced by geopolitical issues.
The foundation of international air travel is the Chicago Convention on International Civil Aviation 1944. Prior to the Chicago Convention, international air travel was governed by two international agreements: the Convention Relating to the Regulation of Aerial Navigation, signed in Paris on 13 October 1919 (the Paris Convention),[7] and the Pan American Convention on Commercial Aviation, signed in Havana on 20 February 1928 (the Havana Convention).[8] However, the nascence of transatlantic flights as an important form of transcontinental travel generated the need for an international agreement and supporting organisation to assist in the facilitation of international air travel.[9] Thus, in the midst of World War II, 54 countries sent representatives to the International Civil Aviation Conference in Chicago. It was at this conference that the Chicago Convention was drafted and signed by 52 of the countries in attendance and where the framework for the International Civil Aviation Organization (ICAO), the United Nations agency charged with developing policies and standards for international civil aviation, was developed. Today, there are 193 member state signatories to the Chicago Convention.[
SDGs, Targets, and Indicators in the Article
1. Which SDGs are addressed or connected to the issues highlighted in the article?
- SDG 8: Decent Work and Economic Growth
- SDG 9: Industry, Innovation, and Infrastructure
- SDG 16: Peace, Justice, and Strong Institutions
2. What specific targets under those SDGs can be identified based on the article’s content?
- SDG 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.
- SDG 9.1: Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all.
- SDG 16.3: Promote the rule of law at the national and international levels and ensure equal access to justice for all.
3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?
Yes, there are indicators mentioned or implied in the article that can be used to measure progress towards the identified targets. These include:
- Number of direct jobs created in the aviation industry (related to SDG 8.5)
- Amount contributed to global GDP by the aviation industry (related to SDG 8.5)
- Development of reliable and sustainable infrastructure in the aviation industry (related to SDG 9.1)
- Availability and utilization of alternative dispute resolution mechanisms in the aviation industry (related to SDG 16.3)
Table: SDGs, Targets, and Indicators
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 8: Decent Work and Economic Growth | Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value. | – Number of direct jobs created in the aviation industry – Amount contributed to global GDP by the aviation industry |
| SDG 9: Industry, Innovation, and Infrastructure | Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all. | – Development of reliable and sustainable infrastructure in the aviation industry |
| SDG 16: Peace, Justice, and Strong Institutions | Target 16.3: Promote the rule of law at the national and international levels and ensure equal access to justice for all. | – Availability and utilization of alternative dispute resolution mechanisms in the aviation industry |
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Source: lexology.com
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