Malaysia Airlines Flight MH370: Airline Bound to Pay Over $40m in Damages

The disappearance of Malaysia Airlines Flight MH370 and its reported crashing in the Indian Ocean without any survivors has raised the question of who will bear the full liability of the mishap.

Total compensation payments to the victims or to their families by the airline and possible third parties would depend on solving the mystery behind the disappearance of the plane and locating it.

Even if the plane is not found, the operator of the airline, Malaysian Airline System, is liable to provide the families of the 227 passengers on board with some compensation. Under international treaty, the airline is bound to pay as much as $175,000 (£106,000, €127,000) per passenger and possibly more, according to Bloomberg.

If the airline can prove that it was not negligent or that a third party, such as terrorists or a manufacturer, was the sole reason for the accident, its payments will be capped at about $175,000. In the absence of such a defence, its liability would be much higher.

Under the Montreal Convention of 1999, an international treaty that covers air travel, the airline's liability could stand at more than $40m.

China and Malaysia, the home countries of most of the passengers on the Kuala Lumpur-Beijing route, are both signatories to the pact. Claims against the airline are expected to be litigated in China and Malaysia.

Evidence for the flight's disappearance due to reasons including hijacking, intentional downing or an on-board fire would enable the family members to go for lawsuits and claim larger amounts, the news agency added.

"The disappearance of Flight 370 remains a mystery. The legal claims against Malaysia Airlines -- those are not a mystery," Robert Hedrick, a pilot and air-disaster lawyer in Seattle, told Bloomberg.

"If the wreckage is located, the evidence may establish liability of other parties."

Malaysian Prime Minister Najib Razak earlier ruled out the possibility of hijacking, saying that based on satellite data, the plane ended up in the Indian Ocean west of Perth, Australia.

Meanwhile, relatives of the victims accused the carrier, Malaysian government and Malaysian military of delays and cover-ups ever since the flight disappeared.