Economic Climate and changing passenger trends in Russia Will claims cost more, or less? RAAKS Conference 25 February 2016 President Hotel, Moscow
Outline What do other courts/legal systems do? Economic factors/social factors/court principles Does the Russian system offer fair compensation Currency issues Availability of other jurisdictions Changes in law in Russia Introduction of Montreal Convention 1999 Change in travelling habits fewer international passenger trips and more domestic trips More or less expensive claims?
Around the World: Europe Netherlands US$400,000 UK US$1,000,000 France - US$1,000,000 Portugal - US$350,000 Spain - US$200,000 Iceland US$250,000 Russia US$200,000- US$450,000** Germany US$1,000,000 Italy US$1,500,000- US$2,000,000 Turkey US$400,000 Greece US$600,000 ** Based on RUR32 = US$1
Around the World: Middle East Iran US$75,000 Jordan US$150,000 UAE US$200,000
Around the World: Africa Algeria US$150,000 Egypt US$250,00 0 Ethiopia US$250,000 Nigeria US$250,000 Kenya US$250,000 Cameroon US$250,000 South Africa US$620,000 Malawi US$270,000
Around the World: Asia China Domestic US$250,000/ International US$350,000 Afghanistan US$20,000 Myanmar US$50-100,000 Laos US$100,000 Nepal US$20,000 India US$200,000 Thailand US$100,000 Taiwan US$500,00 0 Philippines US$150-200,000 Malaysia US$200,000 Indonesia US$150,000
Around the World: Australia Australia Domestic US$500,220 (A$725,000)/ International US$897,000 (A$1,300,000)
Around the World: Americas Costa Rica US$250,000 USA US$6,000,000 Bolivia US$100,000 Mexico US$800,000 Brazil US$1,200,000 Colombia US$1,200,000 Uruguay US$100,000 Peru US$250,000 Chile US$170,000
Russia in the economic doldrums? Falling oil and gas prices Economic sanctions Value of the rouble Expensive imports Inflation rising Consumer prices rising Interest rates rising Manufacturing output declining 2011 2013 2014 2015 2016 GDP growth rate slowing: 4.3% 1.3% 1% -3.7%?%
Russia in the economic doldrums? Source The Russian economy - Will Russia ever catch up? ERPS March 2014
Russia in the economic doldrums? Source The Russian economy - Will Russia ever catch up? ERPS March 2014
Russia in the economic doldrums? 5.3% 25% 11% 72.3% 71 years 01 02 03 04 Employment rate Unemployment rate Life expectancy raised Percentage drop of population below poverty line
The economy aviation issues On the face of it Some economic problems Cumulative losses for Russian Airlines in 2015 20 billion RUR Transaero acquired by Aeroflot 26 October 2015 Likely continuing consolidation and continuing contraction Russian Sukhoi SU24 24 November 2015 Metrojet crash, Egypt 31 October 2015
Economic Sanctions Participants EU/EFTA, US, Canada, Australia, New Zealand and Japan. Measurements Impact of lower oil prices and economic sanctions US$130-140 billion a year source Anton Silvanov 2014
Aviation - Some better news? Aircraft Fleet in Russia and CIS predicted to more than double by 2034 [Airbus] In 2015 Russian air carriers carried 92.017 million passengers; 1.2% down on 2014 Domestic carriage grew by 13.6% to 52.563 million passengers International carriage contracted by 15.8% to 39,508,000 passengers Cargo sector was up 2.7% on 2014 Aeroflot Group carried 39.4 million passengers in 2015 representing a 10.6% year on year increase Aeroflot carried 26.1 million passengers in this period, a 10.6% year on year increase Aeroflot actually increased international traffic 7.8% to 13.4 million passenger and domestic up 13.7% to 12.7 million passengers
Will claims be cheaper? Rouble value Russian Air Code 1997 Claims paid in roubles International carriage
or could claims in fact be more expensive? Introduction of Russian Insurance Act 2012 FZ-67 on compulsory insurance Introduction of Montreal Convention 1999 No defence liability up to SDR113,100 74% of population is urban and provides 85% of purchasing power Size of middle class Long-term economic trend Media pressure the rise and rise of social media Legislation reindexation/interest Overseas litigation
Are claimant lawyers still interested?
Some recent non-us cases, litigating in USA (Russian and others)
Typical causes of action Negligence Bailment Negligent entrustment Failure to monitor/supervise Required defendant Breach of warranty
Conclusions Claims paid in roubles should be cheaper Difficult to predict the long-term prospects much depends on the price of oil Significant, but squeezed middle class Social media A US$/Euro payday Effect of sanctions, likely to be limited
THANK YOU 1,800 1st +360 45 Lawyers and fee earners worldwide Law Firm of the Year Legal Business Awards 2011 Partners worldwide Offices across Europe, Americas, Middle East, Africa, Asia and Australia