The Warsaw Convention (Convention), an international air
carriage treaty that the United States ratified in 1934, sets a
limit on an air carrier's liability for lost cargo at 250 gold
French francs per kilogram, which sum may be converted into any
national currency. In 1978, Congress repealed the Par Value
Modification Act (PVMA), which set an "official" price of gold in
the United States. Nevertheless, the Civil Aeronautics Board (CAB)
continued to sanction the use of the last official price of gold as
a conversion factor. As a result, a $9.07-per-pound limit of
liability remained codified in the CAB regulations governing
international air carriers' tariffs filed under the Federal
Aviation Act of 1958. Franklin Mint Corp. brought suit in Federal
District Court against Trans World Airlines (TWA) to recover
damages in the amount of $250,000 for the loss in 1979 of packages
containing numismatic materials delivered to TWA for transport from
Philadelphia to London. The parties having stipulated that TWA was
responsible for the loss, the only dispute was the extent of
liability. The District Court ruled that, under the Convention, the
liability was limited to $6,475.98, a figure derived from the
weight of the packages, the Convention's liability limit, and the
last official price of gold in the United States. The Court of
Appeals affirmed, but also ruled that, 60 days from the issuance of
the mandate, the Convention's liability limit would be
unenforceable in the United States, since enforcement of the
Convention required a factor for converting the liability limit
into dollars, and there was no United States legislation specifying
a factor to be used by United States courts.
Held:
1. The Convention's cargo liability limit remains enforceable in
United States courts, and was not rendered unenforceable by the
1978 repeal of the PVMA. Pp.
466 U. S.
251-253.
(a) Legislative silence is not sufficient to abrogate a treaty.
Here, neither the legislative histories of the various PVMA's, the
history of the repealing Act, nor the repealing Act itself, make
any reference to the
Page 466 U. S. 244
Convention, the repeal being unrelated to the Convention and
intended to give formal effect to a new international monetary
system. Since the Convention is a self-executing treaty, no
domestic legislation is required to give it the force of law in the
United States. And neither Congress nor the Executive Branch has
given the required notice to other parties to the Convention that
the United States planned to abrogate the Convention. To the
contrary, the Executive Branch continues to maintain that the
Convention's liability limit remains enforceable in the United
States. Pp.
466 U. S.
251-253.
(b) When the parties to a treaty continue to assert its
vitality, a private person may not invoke the doctrine of
rebus
sic stantibus to assert that a treaty ceases to be binding
when there has been a substantial change in conditions since its
promulgation. Accordingly, the erosion of the international gold
standard and the 1978 repeal of the PVMA cannot be construed as
terminating or repudiating the United States' duty to abide by the
Convention's liability limit. P.
466 U. S.
253.
2. A $9.07-per-pound liability limit is not inconsistent with
domestic law or with the Convention itself. Pp.
466 U. S.
254-260.
(a) It is clear that such limit does not contravene any domestic
legislation, absent any suggestion by Congress when it repealed the
PVMA that the CAB should thereafter use a conversion factor
different from the official price of gold or that either of the
political branches expected or intended the repealing Act to affect
the dollar equivalent of the Convention's liability limit. P.
466 U. S.
255.
(b) Tying the Convention's liability limit to today's gold
market would fail to effect any purpose of the Convention's
framers, and would be inconsistent with well-established
international practice. A fixed $9.07-per-pound liability limit
represents a choice not inconsistent with the Convention's purposes
of setting some limits on a carrier's liability, of setting a
stable, predictable, and internationally uniform limit that would
encourage the growth of the air carrier industry, and of linking
the Convention to a constant value that would keep step with the
average value of cargo carried, and so remain equitable for
carriers and transport users alike. Pp.
466 U. S.
255-260.
690 F.2d 303, affirmed.
O'CONNOR, J., delivered the opinion of the Court, in which
BURGER, C.J., and BRENNAN, WHITE, MARSHALL, BLACKMUN, POWELL, and
REHNQUIST JJ., joined. STEVENS, J., filed a dissenting opinion,
post, p.
466 U. S.
261.
Page 466 U. S. 245
JUSTICE O'CONNOR delivered the opinion of the Court.
The question presented in this litigation is whether an air
carrier's declared liability limit of $9.07 per pound of cargo is
inconsistent with the "Warsaw Convention" [
Footnote 1] (Convention), an international air carriage
treaty that the United States has ratified. As a threshold matter
we must determine whether the 1978 repeal of legislation setting an
"official" price of gold in the United States renders the
Convention's gold-based liability limit unenforceable in this
country. We conclude that the 1978 legislation was not intended to
affect the enforceability of the Convention in the United States,
and that a $9.07-per-pound liability limit is not inconsistent with
the Convention.
I
In 1974, the Civil Aeronautics Board (CAB) informed
international air carriers doing business in the United States that
the minimum acceptable carrier liability limit for lost cargo would
thenceforth be $9.07 per pound. Trans World Airlines, Inc. (TWA),
has complied with the CAB order since that time. On March 23, 1979,
Franklin Mint Corp. (Franklin
Page 466 U. S. 246
Mint) delivered four packages of numismatic materials with a
total weight of 714 pounds to TWA for transportation from
Philadelphia to London. Franklin Mint made no special declaration
of value at the time of delivery. [
Footnote 2] The packages were subsequently lost. Franklin
Mint brought suit in United States District Court to recover
damages in the amount of $250,000. The parties stipulated that TWA
was responsible for the loss of the packages. The only dispute
concerns the extent of TWA's liability.
The District Court ruled that, under the Convention, TWA's
liability was limited to $6,475.98, a figure derived from the
weight of the packages, the liability limit set out in the
Convention, and the last official price of gold in the United
States. The Court of Appeals for the Second Circuit affirmed the
judgment, but "rul[ed]" that, 60 days from the issuance of the
mandate, the Convention's liability limit would be unenforceable in
the United States. 690 F.2d 303 (1982).
In a petition for certiorari to this Court, TWA challenged the
Court of Appeals' declaration that the Convention's liability limit
is prospectively unenforceable. In a cross-petition, Franklin Mint
contended that the Court of Appeals' actual holding should have
been retrospective as well. We granted both petitions, 462 U.S.
1118 (1983). We now conclude that the Convention's cargo liability
limit remains enforceable in United States courts and that the
CAB-sanctioned $9.07-per-pound liability limit is not inconsistent
with the Convention. Accordingly, we affirm the judgment of the
Court of Appeals, but reject its declaration that the Convention is
prospectively unenforceable.
II
The Convention was drafted at international conferences in Paris
in 1925, and in Warsaw in 1929. The United States
Page 466 U. S. 247
became a signatory in 1934. More than 120 nations now adhere to
it. The Convention creates internationally uniform rules governing
the air carriage of passengers, baggage, and cargo. Under Article
18, carriers are presumptively liable for the loss of cargo.
Article 22 sets a limit on carrier liability:
"(2) In the transportation of checked baggage and of goods, the
liability of the carrier shall be limited to a sum of 250 francs
per kilogram, unless the consignor has made, at the time when the
package was handed over to the carrier, a special declaration of
the value at delivery and has paid a supplementary sum if the case
so requires. . . ."
"
* * * *"
"(4) The sums mentioned above shall be deemed to refer to the
French franc consisting of 65 1/2 milligrams of gold at the
standard of fineness of nine hundred thousandths. These sums may be
converted into any national currency in round figures."
Reprinted (in English translation) in note following 49 U.S.C. §
1502.
In the United States, the task of converting the Convention's
liability limit into "any national currency" falls within
rulemaking authority which was, for many years, including those at
issue here, delegated to the CAB under the Federal Aviation Act of
1958 (FAA), 49 U.S.C. § 1301
et seq. [
Footnote 3] International air carriers are
required to file tariffs with the CAB specifying "in terms of
lawful money of the United States" the rates and conditions of
their services, including the cargo liability limit that they
claim. [
Footnote 4] The Act
forbids any carrier to charge a
"greater or less or different compensation
Page 466 U. S. 248
for air transportation, or for any service in connection
therewith, than the rates, fares, and charges specified in then
currently effective tariffs. . . . [
Footnote 5]"
The CAB, for its part, is empowered to reject any tariff that is
inconsistent with the FAA or CAB regulations. 49 U.S.C. § 1373(a).
CAB powers are to be exercised
"consistently with any obligation assumed by the United States
in any treaty, convention, or agreement that may be in force
between the United States and any foreign country or foreign
countries. . . ."
49 U.S.C. § 1502.
During the first 44 years of the United States' adherence to the
Convention, there existed an "official" price of gold in the United
States, and the CAB's task of supervising carrier compliance with
the Convention's liability limit was correspondingly simple. The
United States Gold Standard Act of 1900 set the value of the dollar
at $20.67 per troy ounce of gold. [
Footnote 6] On January 31, 1934, nine months before the
United States ratified the Convention, President Roosevelt
increased the official domestic price of gold to $35 per ounce.
[
Footnote 7] In 1945, the
United States accepted membership in the International Monetary
Fund (IMF), and so undertook to maintain a "par value" for the
dollar and to buy and sell gold at the official price in exchange
for balances of dollars officially held by other IMF nations.
[
Footnote 8] For almost 40
years, the $35-per-ounce price of gold was used to derive from the
Convention's
Page 466 U. S. 249
Article 22(2) a cargo liability limit of $7.50 per pound.
See, e.g., 14 CFR § 221.176 (1972).
When the central banks of most Western nations instituted a
"two-tier" gold standard in 1968, the gold-based international
monetary system began to collapse. Thereafter, official gold
transactions were conducted at the official price, and private
transactions at the floating, free market price. App. 21. In
August, 1971, the United States suspended convertibility of foreign
official holdings of dollars into gold. In December, 1971, and then
again in February, 1973, the official exchange rate of the dollar
against gold was increased. These changes were approved by Congress
in the Par Value Modification Act, passed in early 1972 (increasing
the official price to $38 per ounce [
Footnote 9]) and in its 1973 reenactment (setting a
$42.22-per-ounce price [
Footnote
10]). Each time, the CAB followed suit by directing carriers to
increase the dollar-based liability limits in their tariffs
accordingly, first to $8.16 per pound, [
Footnote 11] then to $9.07 per pound. [
Footnote 12]
In 1975, the member nations of the IMF formulated a plan, known
as the Jamaica Accords, to eliminate gold as the basis of the
international monetary system. [
Footnote 13] Effective April 1, 1978, the "Special
Drawing Right" (SDR) was to become the sole reserve asset that IMF
nations would use in their mutual dealings. The SDR was defined as
the average value of a defined basket of IMF member currencies.
[
Footnote 14] In 1976
Congress
Page 466 U. S. 250
passed legislation to implement the new IMF agreement, [
Footnote 15] repealing the Par Value
Modification Act effective April 1, 1978.
As these developments unfolded, the Convention signatories met
in Montreal in September, 1975. In No. 4 of the "Montreal
Protocols," [
Footnote 16]
the delegates proposed to substitute 17 SDR's per kilogram for the
250 French gold francs per kilogram in Article 22 of the
Convention. Although the United States supported this change, and
signed Protocol No. 4, [
Footnote
17] the Senate has not yet consented to its ratification.
[
Footnote 18]
The erosion and final demise of the gold standard, coupled with
the United States' failure to ratify Montreal Protocol No. 4, left
the CAB with the difficult task of supervising carrier compliance
with the Convention's liability limits without up-to-date guidance
from Congress. Although the market price of gold began to diverge
from the official price in 1969, the CAB continued to track the
official price in Orders converting the Convention's liability
limit into dollars. Under CAB Order 74-1-16, promulgated in
1974,
"the minimum acceptable figur[e] in United States dollars for
liability limits
Page 466 U. S. 251
applicable to 'international transportation' and 'international
carriage' . . . [is $] 9.07 [per pound of cargo]. [
Footnote 19]"
Since 1978, the CAB has actively reviewed this $9.07-per-pound
liability limit. [
Footnote
20] As of 1979, however, the CAB continued to sanction the use
of the last official price of gold -- $42.22 per ounce -- as a
conversion factor. A CAB Order published on August 14, 1978,
restated the CAB's position. [
Footnote 21] The $9.07-per-pound limit remained codified
in CAB regulations,
see 14 CFR § 221.176 (1979), and CAB
Order 74-1-16 was still in force. TWA, like other international
carriers, remained subject to Order 74-1-16.
III
The most important issue raised by the parties is whether the
1978 repeal of the Par Value Modification Act rendered the
Convention's cargo liability limit unenforceable in the United
States. The Court of Appeals so declared, reasoning that (i)
enforcement of the Convention requires a factor for converting the
liability limit into dollars and (ii) there is no United States
legislation specifying a factor to be used by United States courts.
We do not accept this analysis.
Page 466 U. S. 252
There is, first, a firm and obviously sound canon of
construction against finding implicit repeal of a treaty in
ambiguous congressional action.
"A treaty will not be deemed to have been abrogated or modified
by a later statute unless such purpose on the part of Congress has
been clearly expressed."
Cook v. United States, 288 U.
S. 102,
288 U. S. 120
(1933).
See also Washington v. Washington Commercial Passenger
Fishing Vessel Assn., 443 U. S. 658,
443 U. S. 690
(1979);
Menominee Tribe of Indians v. United States,
391 U. S. 404,
391 U. S.
412-413 (1968);
Pigeon River Improvement, Slide
& Boom Co. v. Charles W. Co, Ltd., 291 U.
S. 138,
291 U. S. 160
(1934). Legislative silence is not sufficient to abrogate a treaty.
Weinberger v. Rossi, 456 U. S. 25,
456 U. S. 32
(1982). Neither the legislative histories of the Par Value
Modification Acts, the history of the repealing Act, nor the
repealing Act itself, make any reference to the Convention. The
repeal was unrelated to the Convention; it was intended to give
formal effect to a new international monetary system that had, in
fact, evolved almost a decade earlier.
Second, the Convention is a self-executing treaty. Though the
Convention permits individual signatories to convert liability
limits into national currencies by legislation or otherwise, no
domestic legislation is required to give the Convention the force
of law in the United States. The repeal of a purely domestic piece
of legislation should accordingly not be read as an implicit
abrogation of any part of it.
See generally Bacardi Corp. of
America v. Domenech, 311 U. S. 150,
311 U. S.
161-163 (1940).
Third, Article 39 of the Convention requires a signatory that
wishes to withdraw from the Convention to provide other signatories
with six months' notice, formally communicated through the
Government of Poland. [
Footnote
22] The repeal of the
Page 466 U. S. 253
Par Value Modification Act had a sufficient lead time, but
Congress and the Executive Branch took no steps to notify other
signatories that the United States planned to abrogate the
Convention. To the contrary, the Executive Branch continues to
maintain that the Convention's liability limit remains enforceable
in the United States. Brief for United States as
Amicus
Curiae. In these circumstances, we are unwilling to impute to
the political branches an intent to abrogate a treaty without
following appropriate procedures set out in the Convention itself.
See The Federalist No. 64, pp. 436-437 (J. Cooke ed.1961)
(J. Jay).
Franklin Mint suggests that a treaty ceases to be binding when
there has been a substantial change in conditions since its
promulgation. [
Footnote 23]
A treaty is in the nature of a contract between nations. The
doctrine of
rebus sic stantibus does recognize that a
nation that is party to a treaty might conceivably invoke changed
circumstances as an excuse for terminating its obligations under
the treaty. [
Footnote 24]
But when the parties to a treaty continue to assert its vitality, a
private person who finds the continued existence of the treaty
inconvenient may not invoke the doctrine on their behalf.
For these reasons, the erosion of the international gold
standard and the 1978 repeal of the Par Value Modification Act
cannot be construed as terminating or repudiating the United
States' duty to abide by the Convention's cargo liability limit. We
conclude that the limit remains enforceable in United States
courts.
Page 466 U. S. 254
IV
The Court of Appeals correctly recognized that the Convention's
liability limit must be converted into dollars. This requirement
derives not from the Convention itself -- the Convention merely
permits such a conversion -- but from the tariff requirements of §
403(a) of the FAA. [
Footnote
25] 49 U.S.C. § 1373(a).
In 1979, when Franklin Mint's cargo was lost, TWA's tariffs set
the carrier's cargo liability limit at $9.07 per pound. This tariff
had been filed with and accepted by the CAB pursuant to § 403(a),
and was squarely consistent with CAB Order 74-1-16. The
$9.07-per-pound limit thus represented an Executive Branch
determination, made pursuant to properly delegated authority, of
the appropriate rate for converting the Convention's liability
limits into United States dollars. We are bound to uphold that
determination unless we find it to be contrary to law established
by domestic legislation or by the Convention itself. [
Footnote 26]
Page 466 U. S. 255
It is clear, first, that the CAB's choice of a cargo liability
limit of $9.07 per pound does not contravene any domestic
legislation. When an official price of gold was set by statute, the
CAB did, of course, use that price to translate the Convention's
gold-based liability limit into dollars. But when Congress repealed
the Par Value Modification Act, it did not suggest that the CAB
should thereafter use a different conversion factor. Indeed, there
is no hint that either of the political branches expected or
intended that Act to affect the dollar equivalent of the
Convention's liability limit.
Whether the CAB's choice of a $9.07-per-pound limit is
compatible with the Convention itself is more debatable. The
Convention included liability limits, and expressed them in terms
of gold, to effect several different, and to some extent
contradictory, purposes. Our task of construing those purposes is,
however, made considerably easier by the 50 years of consistent
international and domestic practices under the Convention. For the
reasons stated below, we conclude that tying the Convention's
liability limit to today's gold market would fail to effect any
purpose of the Convention's framers, and would be inconsistent with
well-established international
Page 466 U. S. 256
practice, acquiesced in by the Convention's signatories over the
past 50 years. A fixed $9.07-per-pound liability limit therefore
represents a choice by the CAB sufficiently consistent with the
Convention's purposes.
The Convention's first and most obvious purpose was to set some
limit on a carrier's liability for lost cargo. Any conversion
factor will have this effect; in this regard, a $9.07-per-pound
liability limit is as reasonable as one based on SDR's or the free
market price of gold.
The Convention's second objective was to set a stable,
predictable, and internationally uniform limit that would encourage
the growth of a fledgling industry. To this end the Convention's
framers chose an international, not a parochial, standard, free
from the control of any one country. [
Footnote 27] The CAB's choice of a $9.07-per-pound
liability limit is certainly a stable and predictable one on which
carriers can rely. We recognize, however that, in the long term,
effectuation of the Convention's objective of
international uniformity might require periodic adjustment
by the CAB of the dollar-based limit to account both for the
dollar's changing value relative to other Western currencies and,
if necessary, for changes in the conversion rates adopted by other
Convention signatories. Since 1978, however, no substantial changes
of either type have occurred.
Despite the demise of the gold standard, the $9.07-per-pound
liability limit retained since 1978 has represented a reasonably
stable figure when converted into other Western currencies This is
easily established by reference to the SDR, which is the new,
nonparochial, internationally recognized standard of conversion. On
March 31, 1978, for example,
Page 466 U. S. 257
one SDR was worth $1.23667; on March 23, 1979, $1.28626.
[
Footnote 28] At all times
since 1978, a carrier that chose to set its liability limit at 17
SDR's per kilogram as suggested by Montreal Protocol No. 4 would
have arrived at a liability limit in dollars close to $9 per pound.
[
Footnote 29]
The CAB's $9.07-per-pound liability limit also appears to have
been a reasonable interim choice for keeping the Convention's
liability limit as enforced in the United States in line with
limits enforced by other signatories. As of December 31, 1975, 15
nations [
Footnote 30] had
signed Montreal Protocol No. 4, suggesting their intent to set a
liability limit of 17 SDR's per kilogram; other nations have chosen
to continue using the last official price of gold for converting
the Convention's cargo liability limit into national currencies.
[
Footnote 31] Insofar as has
been
Page 466 U. S. 258
possible in the unsettled circumstances since 1975, the CAB's
choice of a $9.07-per-pound limit has thus furthered the
Convention's intent to set an internationally uniform liability
limit.
We recognize that this inquiry into the dollar's value relative
to other currencies would have been unnecessary if the CAB had
chosen to adopt the market price of gold for converting the
Convention's liability limits into dollars. Since gold is freely
traded on an international market, its price always provides a
unique and internationally uniform conversion rate. But reliance on
the gold market would entirely fail to provide a stable unit of
conversion on which carriers could rely. To pick one extreme
example, between January and April, 1980, gold ranged from about
$490 to $850 per ounce. App. 24. Far from providing predictability
and stability, tying the Convention to the gold market would force
every carrier and every air transport user to become a speculator
in gold, exposed to the sudden and unpredictable swings in the
price of that commodity. The CAB has correctly recognized that this
is not at all what the Convention's framers had in mind. The 1978
decision by many of the Convention's signatories to exit from the
gold market cannot sensibly be construed as a decision to compel
every air carrier and air transport user to enter it.
A third purpose of the Convention's gold-based limit may have
been to link the Convention to a constant
value that
Page 466 U. S. 259
would keep step with the average value of cargo carried, and so
remain equitable for carriers and transport users alike. [
Footnote 32] We recognize that, in
an inflationary economy, a fixed, dollar-based liability limit may
fail in the long-term to achieve that purpose. Nonetheless, for the
reasons that follow, we cannot fault the CAB's decision to adhere,
in the six years since 1978, to a constant $9.07-per-pound
liability limit.
The Convention's framers viewed the treaty as one "drawn for a
few years," not for "one or two centuries." [
Footnote 33] That it has, in fact, been adhered
to for over half a century is a tribute not only to the framers'
skills but to the signatories' manifest willingness to accept a
flexible implementation of the Convention's terms. The indisputable
fact is that, between 1934 and 1978, the signatories, by common if
unwritten consent, allowed the value of the liability limit as
measured by the free market price of both gold and other
commodities to decline substantially, even while the official price
of gold was formally maintained. [
Footnote 34] We may not ignore the actual, reasonably
harmonious practice adopted by the United States and other
signatories in the first 40 years of the Convention's existence.
See Factor v. Laubenheimer, 290 U.
S. 276,
290 U. S.
294-295 (1933);
Day v. Trans World Airlines,
Inc., 528 F.2d 31, 35-36 (CA2 1975),
cert. denied,
429 U.S. 890 (1976); Restatement (Second) of Foreign Relations Law
of the United States § 147(1)(f) (1965); 2 C. Hyde, International
Law 72 (1922). In determining whether the Executive Branch's
domestic implementation of the Convention is consistent with
Page 466 U. S. 260
the Convention's terms, our task is to construe a "contract"
among nations. The conduct of the contracting parties in
implementing that contract in the first 50 years of its operation
cannot be ignored.
As of March 31, 1978, $9.07 per pound of cargo therefore
represented a "correct" conversion of the Convention's liability
limit into dollars. [
Footnote
35] Though the purchasing power of the dollar has declined
somewhat since then, the $9.07-per-pound liability limit, viewed in
light of international practice, cannot be declared inconsistent
with the purposes of the Convention and the shared understanding of
its signatories.
Moreover, tying the Convention's liability limit to the free
market price of gold would no longer serve to maintain a constant
value of carriers' liability. Since 1978, gold has been only "a
volatile commodity, not related to a price index, or to the rate of
inflation, or indeed to any meaningful economic measure. . . ."
[
Footnote 36] A liability
limit tied to the gold market might be convenient for a dispatcher
of gold bullion, but such a limit would simply force other air
transport users and carriers to become unwilling speculators in the
gold market. Whatever other purposes they may have had, the
Convention's framers and signatories did not intend to adopt or
agree to a liability limit that is fluid, uncertain, and altogether
inconvenient. [
Footnote 37]
The Convention was intended to reduce, not to increase, the
economic uncertainties of air transportation.
V
The political branches, which hold the authority to repudiate
the Warsaw Convention, have given no indication that
Page 466 U. S. 261
they wish to do so. Accordingly, the Convention's cargo
liability limit remains enforceable in the United States.
Article 22(4) of the Convention permits conversion of the
liability limit into "any national currency." In the United States,
the authority to make that conversion has been delegated by
Congress to the Executive Branch. The courts are bound to respect
that arrangement unless the properly delegated authority is
exercised in a manner inconsistent with domestic or international
law. We conclude that the CAB's decision to continue using a $42.22
per ounce of gold conversion rate after the repeal of the Par Value
Modification Act was consistent with domestic law and with the
Convention itself, construed in light of its purposes, the
understanding of its signatories, and its international
implementation since 1929.
We reject the Court of Appeals' declaration that the Convention
is prospectively unenforceable; the judgment of the Court of
Appeals affirming the judgment of the District Court is
Affirmed.
* Together with No. 82-1465,
Franklin Mint Corp. et al. v.
Trans World Airlines, Inc., also on certiorari to the same
court.
[
Footnote 1]
Convention for the Unification of Certain Rules Relating to
International Transportation by Air, Oct. 12, 1929, 49 Stat. 3000,
T.S. No. 876 (1934), reprinted in note following 49 U.S.C. §
1502.
[
Footnote 2]
Had such a declaration been made, and an additional fee paid,
Franklin Mint would have been able to recover in an amount not
exceeding the declared value.
See Convention, Art. 22(2),
note following 49 U.S.C. § 1502.
[
Footnote 3]
With respect to foreign air transportation, FAA powers are now
exercised by the Department of Transportation in consultation with
the Department of State. 49 U.S.C. §§ 1551(b)(1)(B) and (b)(2). For
simplicity, this opinion will continue to refer only to the
CAB.
[
Footnote 4]
See 49 U.S.C. § 1373(a);
cf. 14 CFR §§
221.38(a)(2), 221.38(j) (1983).
[
Footnote 5]
49 U.S.C. § 1373(b)(1). CAB regulations require each carrier to
notify air transport users of liability limits. "The notice shall
be clearly and conspicuously included on or attached to all of [the
carrier's] rate sheets and airwaybills." 14 CFR § 205.8 (1983).
[
Footnote 6]
See Ch. 41, § 1, 31 Stat. 45 (exchange rate stated in
terms of grains of gold per dollar).
[
Footnote 7]
Presidential Proclamation No. 2072, 48 Stat. 1730, pursuant to
the Gold Reserve Act of 1934, 48 Stat. 337.
[
Footnote 8]
The domestic enabling legislation was the Bretton Woods
Agreements Act, 59 Stat. 512.
See Articles of Agreement of
the International Monetary Fund, 60 Stat. 1401, 2 U.N.T.S. 39,
T.I.A.S. No. 1501 (1945).
[
Footnote 9]
Par Value Modification Act, Pub.L. 92-268, § 2, 86 Stat.
116.
[
Footnote 10]
Par Value Modification Act, Pub.L. 93-110, § 1, 87 Stat.
352.
[
Footnote 11]
CAB Order 72-6-7, 37 Fed.Reg. 11384 (1973), implemented (for
checked passenger baggage) in 14 CFR § 221.176 (1973).
[
Footnote 12]
CAB Order 74-1-16, App. 54, 39 Fed.Reg. 1526 (1974), implemented
(for checked passenger baggage) in 14 CFR § 221.176 (1975).
[
Footnote 13]
Second Amendment of Articles of Agreement of the International
Monetary Fund, Apr. 30, 1976, [1976-1977] 29 U.S.T. 2203, T.I.A.S.
No. 8937.
[
Footnote 14]
The SDR was originally created by the IMF nations in 1969. It
was then valued at one thirty-fifth of an ounce of gold, or one
1969 dollar.
See First Amendment of the Articles of
Agreement of the International Monetary Fund, May 31, 1968, [1969]
20 U.S.T. 2775, T.I.A.S. No. 6748. However there is no longer any
fixed correspondence between the SDR and gold; the SDR is defined
as a specified basket of Western currencies.
[
Footnote 15]
Bretton Woods Agreements Act of 1976, Pub.L. 94-564, § 6, 90
Stat. 2660.
[
Footnote 16]
Montreal Protocol No. 4, done Sept. 25, 1975, reprinted in A.
Lowenfeld, Aviation Law, Documents Supplement 991, 996 (2d
ed.1981). Convention signatories who do not belong to the IMF
determine for themselves how the liability limit will be converted
into their national currencies.
Ibid.
[
Footnote 17]
See Lowenfeld,
supra, § 6.51 at 7-171.
[
Footnote 18]
On November 17, 1981, the Senate Committee on Foreign Relations
reported in favor of consenting to ratification. But on March 8,
1983, by a vote of 50 to 42 in favor of ratification, the Senate
failed to reach the two-thirds majority required for consent. The
matter remains on the Senate calendar.
See S.Exec.Rep. No.
97-45 (1981); 129 Cong.Rec. S2270, S2279 (daily ed. Mar. 8, 1983);
S.Exec.Rep. No. 98-1 (1983).
[
Footnote 19]
App. 56-57; 39 Fed.Reg. 1526 (1974). TWA is included in the
Order's appendix that lists the carriers at which the Order is
directed.
Id. at 1527.
[
Footnote 20]
Three internal agency memoranda have addressed the problem. J.
Golden, Director, Bureau of Compliance and Consumer Protection,
CAB, Memorandum (May 20, 1981), App. 33 (urging retention of the
$42.22 conversion rate until the CAB and the Departments of
Transportation and State have agreed on a new rate); P. Kennedy,
Chief, Policy Development Division, Bureau of Consumer Protection,
CAB, Memorandum (Mar. 18, 1980),
id. at 42 (urging
adoption of the free market price of gold as the conversion
factor); J. Gaynes, Attorney, Legal Division, Bureau of
International Aviation, CAB, Memorandum (Apr. 18, 1980),
id. at 60 (opposing the Kennedy memorandum
recommendation).
[
Footnote 21]
CAB Order 78-8-10, 43 Fed.Reg. 35971, 35972 (1978) (liability
limit of $20 per kilogram).
[
Footnote 22]
Note following 49 U.S.C. § 1502. The United States has, in fact,
followed this procedure once before. On November 15, 1965, the
United States delivered a formal notice of denunciation of the
Convention to the Polish Peoples Republic.
See Lowenfeld
& Mendelsohn, The United States and the Warsaw Convention, 80
Harv.L.Rev. 497, 546-552 (1967). The notice was later
withdrawn.
[
Footnote 23]
See Restatement (Second) of Foreign Relations Law of
the United States § 153, and Comment c (1965).
[
Footnote 24]
However, Article 39(2) of the Convention expressly permits a
Convention signatory to withdraw by giving timely notice. Plainly,
a party to a treaty of voluntary adhesion can have no need for the
doctrine of
rebus sic stantibus except insofar as it might
wish to avoid the notice requirement.
[
Footnote 25]
In this connection the Court of Appeals stated:
"[In repealing the Par Value Modification Act] Congress thus
abandoned the unit of conversion specified by the Convention and
did not substitute a new one. Substitution of a new term is a
political question, unfit for judicial resolution. We hold,
therefore, that the Convention's limits on liability for loss of
cargo are unenforceable in United States Courts."
690 F.2d 303, 311 (CA2 1982) (footnote omitted).
In our view, Congress has not abandoned any "unit of conversion
specified by the Convention" -- the Convention specifies liability
limits in terms of gold francs, and provides no unit of conversion
whatsoever. To the contrary, the Convention invites signatories to
make the conversion into national currencies for themselves. In the
United States, the CAB has been delegated the power to make the
conversion, and has exercised the power most recently in Order
74-1-16. We are not called upon to "[s]ubstitut[e] a new term," but
merely to determine whether the CAB's Order is inconsistent with
the Convention. That determination does not engage the "political
question" doctrine.
[
Footnote 26]
The dissent apparently has no difficulty accepting that, while
Congress selected the conversion rate between gold and the dollar,
"[o]ur practice was consistent with the Convention,"
see
post at
466 U. S. 277,
n. 6, even though the conversion rate selected bore no relation
whatsoever to the dollar price of gold on the free market,
see nn.
35 37 infra. The dissent does
not explain why the CAB, whose powers are exercised pursuant to
express congressional delegation, was disqualified from setting a
similar conversion rate one year after Congress stopped doing
so.
Article 22(4) of the Convention expressly permits each signatory
nation to convert the Convention's liability limits into any
national currency, but provides no conversion rates for doing so.
In this country, 49 U.S.C. § 1373(a) requires such a conversion
into dollars. The CAB has been delegated authority under which it
may determine the appropriate conversion rate, and it has exercised
that authority. Thus, for the extremely narrow purpose of
converting the Convention's liability limits into dollars, Congress
has indeed "delegated its authority over the currency to the CAB."
See post at
466 U. S. 278,
n. 6. We may overrule the CAB's action only if we conclude that it
is inconsistent with the purposes of the Convention or with
domestic law.
[
Footnote 27]
See generally Heller, The Value of the Gold Franc -- A
Different Point of View, 6 J.Mar.L. & Com. 73, 94-95 (1974);
Asser, Golden Limitations of Liability in International Transport
Conventions and the Currency Crisis, 5 J.Mar.L. & Com. 645, 664
(1974); Lowenfeld & Mendelsohn,
supra, n. 22, at 499;
H. Drion, Limitation of Liabilities in International Air Law 183
(1954); Excerpt From Warsaw Convention Conference Minutes, October
4-12, 1929, reprinted at App. 161-164.
[
Footnote 28]
See IMF Survey 125 (Apr. 17, 1978); IMF Survey 114
(Apr. 9, 1979).
[
Footnote 29]
See S.Exec.Rep. No. 98-1, p. 42 (1983); IMF,
International Financial Statistics, Yearbook 521 (1983).
The CAB has in fact accepted airline tariffs in which liability
limits are based on SDR's instead of the fixed $9.07 figure.
See, e.g., Passenger Rules, Tariff No. PR-3 (CAB No. 55),
Rule 25(D)(1)(a)(ii) (Mar. 30, 1983); CAB Order 81-3-143
(Application of British Caledonian Airways Limited (Mar. 24,
1981).
[
Footnote 30]
FitzGerald, The Four Montreal Protocols to Amend the Warsaw
Convention Regime Governing International Carriage by Air, 42 J.
Air Law & Comm. 273, 277, n. 12 (1976).
[
Footnote 31]
SDR's have been adopted as the basis for converting the
Convention limits into national currencies in Canada (Currency and
Exchange Act: Carriage By Air Act Gold Franc Conversion
Regulations, Jan. 13, 1983, 117 Can.Gaz., pt. II, No. 2, at 431
(Jan. 26, 1983)) (reprinted in App. to Brief for Petitioner TWA at
BA36); Italy (Law No. 84, Mar. 26, 1983, 90 Gaz.Uff. (Apr. 1,
1983)) (English translation at App. to Brief for Petitioner TWA at
BA37); the Republic of South Africa (Carriage by Air Act, No. 17 of
1946, as amended by No. 5 of 1964 and No. 81 of 1979, Stat. Rep. S.
Afr. (Issue No. 13) 15, implemented by Dept. of Transport Notice
R2031 (Sept. 14, 1979)) (reprinted in App. to Brief for Petitioner
TWA at BA39); Sweden (Carrier by Air Act (1957:297), ch. 9, § 22
(as amended Mar. 30, 1978)) (reprinted at App. 67); and Great
Britain (Stat.Inst.1980, No. 281) (reprinted at App. 70).
In other countries, the courts have taken the initiative in
adopting the SDR as the new unit of conversion.
See, e.g.,
Kislinger v. Austrian Airtransport, No. l R 145/83 (Commercial
Court of Appeals of Vienna Austria, June 21, 1983) (English
translation in App. to Brief for Petitioner TWA at BA12);
Rendezvous-Boutique-Pafumerie Friedrich und Albine Breitinger
GmbH v. Austrian Airlines, No. 14 R 11/83 (Court of Appeals of
Linz, Austria, June 17, 1983) (English translation in App. to Brief
for Petitioner TWA at BA22).
At least one court has relied instead on the last official price
of gold.
See Costell v. Iberia, Lineas Aereas de Espana, S.
A., No. 255 (Court of Appeal of Valencia, Spain, Oct. 16,
1981) (English translation in App. to Brief for Petitioner TWA at
BA6).
[
Footnote 32]
See references cited in
n 27,
supra.
[
Footnote 33]
Excerpt From Warsaw Convention Conference Minutes, October 4-12,
1929, reprinted at App. 162 (remark of Mr. Rippert (France)).
[
Footnote 34]
For a hypothetical 44-pound lost suitcase, the liability limit
was $330 in 1934, $359 in 1972, and $400 in 1974. In terms of
purchasing power, $330 in 1934 were equivalent to $1,031 in 1972
and $1,215 in 1974.
Id. at 48. Clearly, the
$9.07-per-pound liability limit does not represent the same value
that was in effect when the United States adhered to the
Convention.
[
Footnote 35]
On that date, the official price of gold remained at $42.22 per
ounce; the free market price of gold was about $182 per ounce.
See The Wall Street Journal, Apr. 3, 1978, p. 29, col.
1.
[
Footnote 36]
Lowenfeld,
supra, n 17, § 6.51, at 7-169.
[
Footnote 37]
It is noteworthy that, in the decade between 1968 and 1978, the
free market price of gold rose as high as $200 per ounce, App. 24,
yet the $42.22 official price of gold was uniformly accepted during
that period as appropriate for converting the Convention's
liability limit into dollars.
JUSTICE STEVENS, dissenting.
This litigation involves the interpretation of Article 22 of the
Warsaw Convention. The plain language of that Article, quoted
ante at
466 U. S. 247,
requires that the liability limits be determined by reference to
the value of "gold at the standard of fineness of nine hundred
thousandths" and then converted into our "national currency in
round figures."
The Court states that the Warsaw Convention's liability
limitation remains enforceable in United States courts, but that is
not what the Court holds. The Court holds that the liability
limitation agreed upon by the Convention is not enforceable in
United States courts. Rather, a liability limitation set by Trans
World Airlines, and accepted by the Civil Aeronautics Board, is
held to be enforceable in United States courts, because that
limitation is deemed to correspond more closely to the Convention's
"purposes" than the limitation
Page 466 U. S. 262
actually selected by the Convention itself. Thus, instead of
enforcing the Convention's liability limitation, the Court has
rewritten it.
I
A treaty is essentially a contract between or among sovereign
nations.
See Washington v. Washington Commercial Passenger
Fishing Vessel Assn., 443 U. S. 658,
443 U. S. 675
(1979). General rules of construction apply to international
agreements.
See Ware v. Hylton,
3 Dall.199,
3 U. S. 240-241
(1796) (opinion of Chase, J.). As with any written document,
there
"is a strong presumption that the literal meaning is the true
one, especially as against a construction that is not
interpretation, but perversion. . . ."
The Five Per Cent. Discount Cases, 243 U. S.
97,
243 U. S. 106
(1917). International agreements, like
"other contracts, . . . are to be read in the light of the
conditions and circumstances existing at the time they were entered
into, with a view to effecting the objects and purposes of the
States thereby contracting,"
Rocca v. Thompson, 223 U. S. 317,
223 U. S.
331-332 (1912);
see also Factor v.
Laubenheimer, 290 U. S. 276,
290 U. S. 295
(1933), and should be interpreted according to the "received
acceptation of the terms in which they are expressed."
United States v.
D'Auterive, 10 How. 609,
51 U. S. 623
(1851).
The great object of an international agreement is to define the
common ground between sovereign nations. Given the gulfs of
language, culture, and values that separate nations, it is
essential in international agreements for the parties to make
explicit their common ground on the most rudimentary of matters.
The frame of reference in interpreting treaties is naturally
international, and not domestic. Accordingly, the language of the
law of nations is always to be consulted in the interpretation of
treaties.
The Pizarro,
2 Wheat. 227,
15 U. S. 246
(1817).
See also Santovincenzo v. Egan, 284 U. S.
30,
284 U. S. 40
(1931) ("As treaties are contracts between independent nations,
their words are to be taken in their ordinary meaning
as
understood in the public law of nations'") (citation
omitted));
Page 466 U. S.
263
Society for the Propagation of
the Gospel in Foreign Parts v. New Haven, 8 Wheat.
464, 21 U. S. 490
(1823). Constructions of treaties yielding parochial variations in
their implementation are anathema to the raison d'etre of
treaties, and hence to the rules of construction applicable to
them. Geofroy v. Riggs, 133 U. S. 258,
133 U. S. 271
(1890) ("It is a general principle of construction with respect to
treaties that they shall be liberally construed so as to carry out
the apparent intention of the parties to secure equality and
reciprocity between them. As they are contracts between independent
nations, in their construction, words are to be taken in their
ordinary meaning, as understood in the public law of nations and
not in any artificial or special sense impressed upon them by local
law, unless such restricted sense is clearly intended"); see
also Tucker v. Alexandroff, 183 U. S. 424,
183 U. S. 437
(1902).
Finally, but most fundamentally, a treaty is positive law.
Justice Story's words concerning the judicial role in enforcing
treaties are strikingly relevant to the issue facing us today:
"In the first place, this Court does not possess any
treaty-making power. That power belongs, by the constitution, to
another department of the Government; and to alter, amend, or add
to any treaty by inserting any clause, whether small or great,
important or trivial, would be, on our part, an usurpation of power
and not an exercise of judicial functions. It would be to make, and
not to construe, a treaty. Neither can this Court supply a
casus omissus in a treaty, any more than in a law. We are
to find out the intention of the parties by just rules of
interpretation applied to the subject matter; and having found
that, our duty is to follow it as far as it goes, and to stop where
that stops -- whatever may be the imperfections or difficulties
which it leaves behind."
"
* * * *"
"In the next place, this Court is bound to give effect to the
stipulations of the treaty in the manner and to the
Page 466 U. S. 264
extent which the parties have declared, and not otherwise. We
are not at liberty to dispense with any of the conditions or
requirements of the treaty, or take away any qualification or
integral part of any stipulation, upon any notion of equity or
general convenience, or substantial justice. The terms which the
parties have chosen to fix, the forms which they have prescribed,
and the circumstances under which they are to have operation rest
in the exclusive discretion of the contracting parties, and,
whether they belong to the essence or the modal parts of the
treaty, equally give the rule to judicial tribunals. The same
powers which have contracted are alone competent to change or
dispense with any formality. The doctrine of a performance
cy
pres, so just and appropriate in the civil concerns of private
persons, belongs not to the solemn compacts of nations so far as
judicial tribunals are called upon to interpret or enforce them. We
can as little dispense with forms as with substance."
The Amiable
Isabella, 6 Wheat. 1,
19 U. S. 71-73
(1821).
II
Two years after Charles Lindbergh captured the world's
imagination by piloting the Spirit of St. Louis from New York to
Paris, delegates from two dozen nations met in Warsaw and drafted
an international agreement to encourage the establishment of a
secure international civil aviation industry. The Warsaw Convention
provided a uniform system of documentation for international
flights, and, more significantly, a uniform limitation on
international carriers' liability to passengers and shippers.
International uniformity, naturally, was the touchstone of the
Convention.
See Preamble of Convention, note following 49
U.S.C. § 1502.
Air transportation was then viewed as dangerous. The liability
limitation was deemed necessary in order to enable air carriers "to
attract capital that might otherwise be
Page 466 U. S. 265
scared away by the fear of a single catastrophic accident."
Lowenfeld & Mendelsohn, The United States and the Warsaw
Convention, 80 Harv.L.Rev. 497, 499 (1967). [
Footnote 2/1]
In settling on a particular figure for a liability limitation,
the delegates at Warsaw first had to agree upon a common standard
of value. They did so in unambiguous terms: the standard of value
was gold of a stated fineness. Art. 22 (4). The liability
limitation for cargo was set at 250 units of fine gold weighing 65
1/2 milligrams per unit. Arts. 22(2), 22(4). [
Footnote 2/2] The delegates chose an international
standard of value -- a standard which would be the same in Paris as
it would be in New York.
The Convention, while using gold as a standard of value,
recognized that all nations did not use it as a medium of
exchange.
Page 466 U. S. 266
change. Therefore, payment in specie was not required or
anticipated by the Convention. Rather, the sum of gold set forth in
the Convention could be converted into national currencies in round
figures. Art. 22(4). All that making the conversion would entail is
knowledge of a fact: the amount of that national currency that
would exchange for the specified sum of gold.
The unsuitability of relying upon a national currency as a
standard of value was demonstrated as a point of actual fact at the
outset of the Convention's deliberations on the liability
limitation. The draft proposal prepared prior to the Warsaw
proceedings by the Comite International Technique d'Experts
Juridique Aeriens -- the functional equivalent of a bill reported
to the floor of a legislative assembly by a committee -- suggested
a limitation of 100 gold francs. Prior to the Convention, however,
the franc had been fluctuating in value. France had suspended the
convertibility of its currency into gold since the Great War, but
returned to a convertible, devalued franc in 1928. The first order
of business at the Warsaw proceedings concerning the liability
limitation, therefore, was to convert the liability limits
contained in the draft proposal, expressed in gold francs defined
by a law of August 5, 1914, to the new stabilized French franc
defined by the law of June 25, 1928, to be 65.5 milligrams of fine
gold. This was a simple matter, for the standard of value of the
two statutes was the same -- gold -- and there was a 1-to-5 ratio
between the former gold franc and the new French franc. Since the
French currency had stabilized, and since the law of June 25, 1928,
defined the French franc in terms of gold, the French proposed that
the Convention could eliminate the phrase "the values hereabove are
gold values" from the draft proposal. App. 159.
The Swiss delegate submitted a proposal corresponding to the
International Railroad Convention for the calculation of values. He
stated:
Page 466 U. S. 267
"Naturally, when we prepared our text, the French franc was
variable; it has been stabilized since. But the fact that a
currency has been stabilized does not imply that it is a final
thing; a law can always modify another law. For this reason, in
Switzerland, we have preferred to stick to the gold standard,
which is the same in all countries, since there is but one
quality of gold."
"We would not be opposed to refer to the French franc, but to
the gold French franc, that is to say, based on a weight of gold at
such and such one thousandth."
"Naturally, one can say 'French franc,' but the French franc,
it's your national law which determines it, and one need have only
a modification of the national law to overturn
the essence of
this provision. We must base ourselves on an international
value, and we have taken the [gold] dollar. Let one take the
gold French franc, it's all the same to me,
but let's take a
gold value . . . as a basis of calculation, be it American or
French."
Id. at 161162 (emphasis supplied).
The French delegate resisted the Swiss proposal, pointing out
that the particular formula proposed by the Swiss delegate was
based on the definition of the 1914 gold franc, and then
stating:
"If this Convention of air law is to be applied during one or
two centuries, I would perhaps share the fears of [the Swiss
delegate], but it's a question of stabilization which was done in
practically every country, for a Convention which is drawn for a
few years, and I believe that, when you will have fixed the present
French franc, you will add nothing in saying 'gold franc.' What
fear can you have? It is evident that the definition will
correspond to the present franc."
Id. at 162.
The delegate from Great Britain inquired what would happen if
the French franc were to be revalued again. The
Page 466 U. S. 268
French delegate responded that the Convention would apply to the
French franc as defined in the 1928 statute. The Swiss delegate
then stated no objection to using the French franc, but objected to
referring to the French statute, and proposed: "insert in our
international convention the same formula as that which you have in
France, and we accept it."
Id. at 163. The French delegate
relented, and the Convention agreed to the proposal.
Once an international standard of value had been agreed to, the
remaining order of business was to select the quantitative
limitation on liability in units of that standard. A liability
limitation of 500 new French francs for cargo was contained in the
draft proposal. The French, however, proposed a limit of 100 new
French francs per kilogram. The French delegate argued that the
draft proposal's limit was too high, based upon air carriers'
representations that the 100 franc figure represented the actual
value of cargo, on the average. That is, the air carriers divided
the declared value of cargo by the number of kilograms of cargo for
the year 1928, which yielded a figure of approximately 130 francs
per kilogram.
Id. at 160. The German delegate argued that
the French figure was far too low, and proposed a figure of 250
francs, which was ultimately agreed upon.
A gold clause such as that contained in the Convention was
common in treaties,
see, e.g., Article 262 of The Treaty
of Versailles; Article 214 of The Treaty of St. Germain, and
Article 197 of the Treaty of Trianon, and other international
agreements. The very year the Convention was drafted, a major
controversy on the world financial scene was resolved respecting
gold clauses which were not drawn as artfully as that contained in
the Convention. The Permanent Court of International Justice, in
Payment of Various Serbian Loans Issued in France, 2
Hudson W. C. 340 (1929), and
Payment in Gold of Brazilian
Federal Loans Issued in France, 2 Hudson W. C. 402 (1929)
(Serbian and Brazilian Bond Cases)
Page 466 U. S. 269
(July 12, 1929), held that simple references to the gold franc
in certain international obligations were intended to represent a
gold standard of value, 2 Hudson W.C., at 365. The court
continued:
"As this standard of value was adopted by the Parties, it is not
admissible to assert that the standard should not govern the
payments because the depreciation in French currency was not
foreseen, or, as it is insisted, could not be foreseen at the time
the contracts were made.
The question is not what the Parties
actually foresaw, or could foresee, but what means they selected
for their protection. To safeguard the repayment of the loans,
they provided for payment in gold value having reference to a
recognized standard [of weight and fineness]."
"
* * * *"
"The conclusion at which the Court has thus arrived is not
affected by the fact that, for more or less extended periods, gold
specie in francs or a franc at gold parity was not quoted on the
money market, as was the case at the time when the loans were
issued; for the value can always be fixed either by comparison with
the exchange rates of currency of a country in which gold coin is
actually in circulation,
or, should this not be possible, by
comparison with the price of gold bullion. Once the gold value
is fixed, it is its equivalent in money in circulation which
constitutes the amount which is payable. . . ."
Id. at 366-367 (emphasis supplied). [To construe the
bonds otherwise], in substance, would eliminate the word "gold"
from the bonds. The contract of the Parties cannot be treated in
such a manner. When the Brazilian Government promised to pay "gold
francs," the reference to a well-known standard of value cannot be
considered as inserted merely for literary effect, or as a routine
expression without significance.
Page 466 U. S. 270
The Court is called upon to construe the promise, not to ignore
it.
"
* * * *"
". . . It was depreciation in value that was the object of the
safeguard, not in this or that particular currency, and it was
evidently for this reason that the reference was made to the
well-known stability of gold value."
Id. at 422-423 (emphasis supplied).
This language is not only significant in terms of the light that
it casts on the law of nations and the delegates' contemporaneous
intention, but it is also, quite simply, good law. The dissent
argued that the intention of the parties was simply not clear
enough from the use of the term gold franc, observing it
"was possible, for instance, to stipulate, and this is
frequently done, that the payments must be effected in gold francs
of the same weight and standard as that of the franc in circulation
at the time in France. . . ."
Id. at 431 (Bustamante, J., dissenting). This, of
course, is what the Convention did. Indeed, at the insistence of
the Swiss delegate, the Convention went even further, and
eliminated the reference to French law altogether. Moreover, the
gold clause did not depend on signatory nations' adhering to a gold
standard. Indeed, such clauses were used in contemplation of a
nation going off the gold standard as a method of describing and
measuring payment with the intention of guarding against
fluctuations in the value of a domestic currency.
Feist v.
Societe Intercommunale Belge D'Electricite, [1934] A. C. 161,
171-173.
The intention of the Convention simply could not be more
manifest. The plain language of the Convention, the deliberations
of the delegates, and the contemporary law of nations leave no
question as to the the intent of the gold clause:
"Here what was intended was to assure the payment of a money
debt in dollars of a value as constant as that of gold.
Norman
v. Baltimore & Ohio R. Co., [
294 U.S.
240,]
Page 466 U. S. 271
294 U. S. 302 [1935];
cf. Feist v. Societe Intercommunale Belge D'Electricite,
L.R. [1934] A.C. 161, 172, 173. . . . Weasel words will not avail
to defeat the triumph of intention when once the words are read in
the setting of the whole transaction."
Holyoke Water Power Co. v. American Writing Paper Co.,
300 U. S. 324,
300 U. S. 336
(1937). The Convention was of the view that its standard of value
must have intrinsic value, and that gold, valued throughout the
world, was a most suitable measure of value.
See 1 A.
Smith, The Wealth of Nations 23-28 (1911); J. Mill, Principles of
Political Economy 484-485 (1936);
See
also The Legal Tender
Cases, 12 Wall. 457 (1871) (overruling
Hepburn v.
Griswold, 8 Wall. 603 (1870)); 12 Wall. at
79 U. S. 624
(Clifford, J., dissenting);
id. at
79 U. S. 647,
79 U. S. 650
(Field, J., dissenting);
Bronson v.
Rodes, 7 Wall. 229,
74 U. S. 246,
74 U. S. 249
(1869);
see generally Hepburn v. Griswold, 8 Wall. at
75 U. S.
607-608;
Ogden v.
Saunders, 12 Wheat. 213,
25 U. S. 265
(1827). Gold was money:
"an universal medium or common standard, by a comparison with
which the value of all merchandise may be ascertained, or it is a
sign which represents the respective values of all
commodities."
1 W. Blackstone, Commentaries *276. The fluctuating and
uncertain value of paper money, a fact long taken as gospel,
e.g., J. Mill, Principles of Political Economy 542-563
(1936);
The Legal Tender Cases, 12 Wall. at
79 U. S. 679
(Field, J., dissenting);
Bronson v. Rodes, 7 Wall. at
74 U. S. 246;
Craig v.
Missouri, 4 Pet. 410,
29 U. S. 432
(1830), and a point hit home by the rampant inflation which had
been decimating the paper currencies of Europe, including France,
during the post- World War I era, led the Convention expressly to
reject such a standard of value.
The purpose and effect of gold clauses such as that contained in
the Convention were not only well known in this country at the time
the United States adhered to the Convention, such gold clauses were
actually made unlawful in 1933. Congress declared that
"every provision contained in or made with respect to any
obligation which purports to give the obligee
Page 466 U. S. 272
a right to require payment in gold or a particular kind of coin
or currency, or in an amount in money of the United States measured
thereby, . . . to be against public policy. . . ."
Joint Resolution of June 5, 1933, 48 Stat. 113, 31 U.S.C. §
463(a) (1976 ed.). [
Footnote 2/3]
The important point is that there simply was no question as to the
purpose and effect of such a clause, absent some valid exercise of
governmental power over the currency to subvert it. It
"calls for the payment of value in money, measured by a stated
number of gold dollars of the standard defined in the clause.
Feist v. Societe Intercommunale Belge d'Electricite,
[1934] A. C. 161, 170-173;
Serbian and Brazilian Bond
Cases, P.C.I.J., series A. Nos. 20-21, pp. 32-34, 109-119. In
the absence of any further exertion of governmental power, that
obligation plainly could not be satisfied by payment of the same
number of dollars, either specie or paper, measured by a gold
dollar of lesser weight, regardless of their purchasing power or
the state of our internal economy at the due date."
Perry v. United States, 294 U.
S. 330,
294 U. S.
358-359 (1935) (Stone, J., concurring);
see also
Norman v. Baltimore & Ohio R. Co., 294 U.
S. 240 (1935);
Nortz v. United States,
294 U. S. 317
(1935);
id. at
294 U. S. 364
(McReynolds, J., dissenting) (gold clauses intended to afford
definite standard or measure of value and thus guard against
fluctuations in currency);
see generally Guaranty Trust Co. v.
Henwood, 307 U. S. 247
(1939).
III
The United States did not participate in the Warsaw proceedings,
though it did send an observer. The Aeronautics
Page 466 U. S. 273
Branch of the Commerce Department studied the Convention and
communicated with United States air carriers, who universally gave
it their strong support. Lowenfeld & Mendelsohn, The United
States and the Warsaw Convention, 80 Harv.L.Rev. 497, 502 (1967).
The President submitted the Convention to the Senate in 1934, which
gave its advice and consent by voice vote without committee
hearings, committee reports, or floor debate. 78 Cong.Rec. 11582
(1934).
The Warsaw Convention's limitation on liability for damage to
cargo has not been altered in the past half-century so far as the
United States is concerned: the United States continues to adhere
to the Convention as drafted in 1929.
Conditions in the world of aviation are, of course, radically
different than they were 50 years ago. The Spirit of St. Louis, and
the age of aviation it represents, are relics of the past. What was
then a startling and daring feat for "Lucky Lindy" is now a humdrum
occurrence for millions of travelers. Air travel is among the
safest forms of transportation, and the fledging venture of a half
century ago is a major, established international industry today.
Nevertheless, though application of the Warsaw Convention's
liability limitation is anachronistic in today's world of aviation,
we are obliged to enforce it so long as the political branches of
the Government adhere to the Convention. The maxim that
cessante ratione legis, cessat et ipsa lex, applicable to
the common law, does not govern the judiciary in cases involving
application of positive law.
Conditions in the world of finance are, of course, also
radically different than they were 50 years ago, when the nations
of the world were attempting to reinstitute the international gold
exchange standard, abandoned at the outbreak of World War I. The
gold standard as a stable medium of international exchange, and the
use of gold as an official standard of value for domestic purposes,
are relics of the past. What has not changed, however, is the
concept of a standard of value, and the effect of adopting one item
as the standard as
Page 466 U. S. 274
opposed to another. A relic though a gold standard may be, it
was the standard adopted by the Convention. The delegates to that
Convention were schooled not in the theories of John Maynard
Keynes, but rather in the accepted learning of John Stuart Mill. We
are as obliged to apply the standard of value agreed upon by the
Convention as we are obliged to apply the liability limitation.
[
Footnote 2/4] Indeed, of course,
it is meaningless
Page 466 U. S. 275
to attempt to speak of one without the other: a liability
limitation has no meaning without reference to a standard of
value.
"The value of a thing is what it will exchange for: the value of
money is what money will exchange for; the purchasing power of
money."
J. Mill, Principles of Political Economy 489 (1936). The United
States, of course, clung to a gold standard until recently. That
is, gold was, at least in theory, an official standard of value for
the currency, and hence the number of dollars which would exchange
for a given amount of gold was set by law. When the "price" of gold
was fixed by law, the conversion of French francs, merely a sum of
gold, into United States dollars, also merely a sum of gold, was
determined by law.
See generally 90 U.
S. Richards, 23 Wall. 246 (1875). Gold has now been
demonetized. But the Convention's standard of value remains and the
concept of value has not changed. The price of gold is simply no
longer fixed by law. Gold, however, still will exchange for
dollars. The rate at which a domestic currency exchanges for gold
was and is the only "conversion" permitted or anticipated by the
Convention. That figure is the liability limitation of the Warsaw
Convention.
The $9.07-per-pound limit set in TWA's tariff is void under
Article 23 of the Convention, which nullifies "[a]ny provision
tending to relieve [a] carrier of liability or to fix a lower limit
than that which is laid down in this convention." That tariff is no
less void because it was accepted by the CAB.
E.g., 49
U.S.C. § 1502 (CAB must exercise its authority over tariffs
Page 466 U. S. 276
"consistently with any obligation assumed by the United States
in any treaty, convention, or agreement that may be in force
between the United States and any foreign country or foreign
countries . . ."). [
Footnote
2/5]
The drafters of the Convention would surely have agreed that
the
"least covert of all modes of knavery . . . consists in calling
a shilling a pound, that a debt of one hundred pounds may be
cancelled by the payment of one hundred shillings."
J. Mill, Principles of Political Economy 486 (1936). Basically,
TWA invites us to call a dime a dollar, in order to cancel
Page 466 U. S. 277
a debt of 80,000 dollars by the payment of 80,000 dimes. We
should not accept that invitation.
IV
The approach of the Court to this litigation is quite different
from mine. Rather than attempting to ascertain the intent of the
Convention and then applying the liability limitation thought
appropriate by the Convention, the Court considers its function to
make one up, with the aid of the Civil Aeronautics Board, so long
as its "choice" is "sufficiently consistent" with the broad
"purposes" of the Convention.
Ante at
466 U. S. 256.
[
Footnote 2/6]
Page 466 U. S. 278
The purported textual basis in the Convention for the Court's
freewheeling approach to this case is Article 22(4), which permits
the sums of gold specified therein to be converted
Page 466 U. S. 279
into an equivalent amount of any national currency.
Ante at
466 U. S. 260.
The Court, of course, does not convert those sums into dollars; the
Court converts the standard of value selected by the Convention
into a standard of value expressly rejected by the Convention. In
this way, it substitutes a fixed $9.07-per-pound liability limit
for a liability limit of a sum of gold per pound. The only
relationship between the two figures is a historical one: that is
to say, one which no longer exists. [
Footnote 2/7]
The Court tells us that the limit agreed to by the Convention is
"fluid, uncertain, and altogether inconvenient" in
Page 466 U. S. 280
today's world.
Ante at
466 U. S. 260.
[
Footnote 2/8] If the Convention as
drafted is unworkable in today's world, that should not be
surprising. To paraphrase the majority, it was written for a few
years, not for a half century of the most rapid and fundamental
changes in the history of the planet. The majority takes the
Convention written for a few years in the era of the Spirit of St.
Louis, and rewrites it in the hope, I presume, that it will last a
few more years into the age of the Space Shuttle. Just why it does
so escapes me. The question whether that needs to be done, and the
question whether that should be done, are simply not decisions for
this Court to make.
The Court reaches its singularly peculiar result by concluding
that the method of limiting liability chosen by the Convention
would fail to effect any purpose of the Convention's framers in
light of the contemporary domestic and international monetary
structure.
Ante at
466 U. S. 255.
[
Footnote 2/9] Ironically, in
Page 466 U. S. 281
essence, the Court agrees with the rationale of the Court of
Appeals: that the limit is unenforceable on grounds of frustration
of purpose. The Court differs with the Court of
Page 466 U. S. 282
Appeals only in terms of the remedy. Whereas the Court of
Appeals thought the appropriate remedy to be rescission of the
agreement, the Court thinks the appropriate remedy is reformation
of the agreement. Of course, if the premise of the Court is
correct, and the liability limitation is unworkable in today's
world, there is but one remedy: amendment of the Convention by the
parties. [
Footnote 2/10]
V
Some students of the Court take for granted that our decisions
represent the will of the judges, rather than the will of the law.
[
Footnote 2/11] This dogma may be
the current fashion, but I remain convinced that such remarks
reflect a profound misunderstanding of the nature of our work.
Unfortunately, however, cynics -- parading under the banner of
legal realism -- are given a measure of credibility whenever the
Court bases a decision on its own notions of sound policy,
rather
Page 466 U. S. 283
than on what the law commands. [
Footnote 2/12] It does so today. [
Footnote 2/13] The task of revising an
international treaty is not one that this Court has any authority
to perform. I respectfully dissent.
[
Footnote 2/1]
These fears were epitomized by the crash of the Hindenberg in
1937, though the Warsaw Convention's liability limitation could not
save the dirigible -- then a significant mode of international air
transportation -- from rapid extinction.
See generally L.
Ege, Balloons and Airships 176-221 (1973); D. Robinson, Giants in
the Sky 250-315 (1973).
The liability limitation, it may be noted, was not limited to
damages arising from special risks of an aircraft crash, nor did it
fully protect carriers from those special risks. With respect to
parties contracting with air carriers to ship goods, the Convention
wrote with a broad brush: limiting liability as well for the kind
of damage to goods that would be as likely to occur in any mode of
transportation -- such as the loss of a single item of cargo in
connection with a safe flight. On the other hand, the Convention
provided air carriers with no special protection whatsoever
vis-a-vis third parties who might be injured by air
crashes.
[
Footnote 2/2]
These units, it so happened, corresponded to the French franc as
defined by a 1928 French statute. It was thus convenient to call
them francs, and the Convention did so. That French statute,
however, could have been repealed the day after the delegates
adjourned their meeting, and it would not have affected the
liability limitation. For the delegates had selected as the
standard of value a commodity with a value independent of any one
nation's control; indeed, a commodity perceived to have "intrinsic"
value -- a commodity individuals had valued before there were
nations, and would value whether or not national governments made
it an official medium of exchange.
[
Footnote 2/3]
Since the Convention was adhered to by the United States
subsequent to the passage of this statute, presumably the
Convention was an exception to this prohibition, unless we are to
indulge the inference that Congress simultaneously abrogated and
ratified the Convention. In any event, this statute has been
repealed with respect to obligations incurred after October 27,
1977. 31 U.S.C. § 5118(d)(2).
See 123 Cong.Rec.
33219-33220 (1977).
[
Footnote 2/4]
A staff memorandum addressed to the Civil Aeronautics Board on
March 18, 1980, by the Chief, Policy Development Division, contains
this telling comment on the background of the Warsaw liability
limits and their contemporary relevance:
"The Warsaw Convention was negotiated during the late 1920's,
when the aviation industry was in its infancy. The minutes of the
negotiations show that the primary concerns of the drafters are no
longer of great importance to the industry. In addition, their
assumptions about how the liability limitation mechanism would work
were erroneous."
"In 1929, air travel was perceived by the public and, more
importantly, by insurance companies to be an extremely risky mode
of transportation. A major justification for limiting liability was
that, unless carriers could present potential insurers with some
degree of predictability in estimating damages from aircraft
accidents, they would have great difficulty in obtaining coverage.
Furthermore, the delegates had little sympathy for anyone foolish
enough to board an airplane without enough personal insurance to
provide for his widow (or her widower) and children should the
plane crash. Over the years, air travel has become one of the
safest modes of transportation, and airlines, even those operating
under circumstances where they cannot limit their liability for
death or personal injury, have no special difficulties finding
insurers."
"The minutes also reflect the delegates' rationale for using
gold as the unit of reference in determining carrier liability
limits, instead of pegging the limits to some particular currency
like the dollar or the franc, with no reference to the metal. . .
."
"Warsaw has become an anachronism, yet various attempts to amend
it have become stalled by the ratification process. While the
Guatemala and Montreal Protocols would have revised the limits
upward, the proposed limits were still relatively low, and none of
the proposals contained a mechanism that would provide for
periodical adjustments to compensate for inflation. Article 22 tied
to gold, however, overcompensates for inflation to the point that
the industry may view it as a sort of passengers' affirmative
action plan that is supposed to make up for years of unreasonably
low limits. Although gold-based limits may not be the most rational
approach to allocating risks between carriers and consumers of
international air transportation, the framers of Warsaw
deliberately adopted this approach -- expressly rejecting a dollar
or some other currency-based system -- and probably left us no
flexibility as long as Warsaw remains in effect."
App. 49-51 (footnote omitted).
[
Footnote 2/5]
The majority asks why the CAB was "disqualified from setting a
similar conversion rate
one year after Congress stopped doing
so."
Ante at
466 U. S. 255, n. 26 (emphasis supplied). So framed, the
majority's question seems to answer itself. What the majority
ignores is that the powers delegated to the CAB, 49 U.S.C. § 1502,
previously quoted
supra, must be exercised consistently
with any convention in force, including the Warsaw Convention.
Although the Court makes a ritual of referring to the "CAB's
choice" in its opinion (implying that it might not have made the
same choice independently),
ante at
466 U. S. 255,
466 U. S. 256,
466 U. S. 257,
466 U. S. 258,
466 U. S. 259,
this is a suit between two private parties, not a declaratory
judgment action challenging the CAB's exercise of its authority
over tariffs. If it were, one would frame the question as whether
the CAB has exercised its authority consistently with the
Convention, though that is not how the majority frames the question
presented at the outset of its opinion.
Ante at
466 U. S. 245.
In any event, the answer to that question, of course, turns on what
the Convention means. On this matter, the CAB's views are not
entitled to any special deference. While the Convention is a
limitation on the CAB's powers, the CAB is not the governmental
organ charged with enforcing the liability limitation -- that
responsibility rests with the courts of the United States. The
Solicitor General correctly observes:
"The Warsaw Convention is a self-executing treaty that provides
a source of rules of decision applicable in United States courts
without requiring enactment of any supplementary implementing
legislation by Congress."
Brief for United States as
Amicus Curiae 16. Courts,
not the CAB, render money judgments, and in rendering those money
judgments, courts must apply the rules of decision provided by the
Convention. Furthermore, even if some deference were to be accorded
to the CAB's views, the CAB's position would have to be rejected,
since it conflicts with the plain meaning of the Convention.
[
Footnote 2/6]
The Court does speak of intent at the close of its opinion.
Ante at
466 U. S. 260.
Its approach to ascertaining intent is novel, to say the least. It
postulates the general "purposes" of the liability limitation. It
then divines the effects of a gold-based liability in today's
world. It finds the general purposes inconsistent with a gold-based
limitation, and concludes that the Convention did not intend to
adopt a gold-based limitation. The rather telling deficiency with
this conclusion is that the Convention did adopt a gold-based
limitation. The Court itself must recognize this defect, for it
tells us that, to achieve their purposes, "the Convention's framers
chose an international, not a parochial, standard, free from the
control of any one country."
Ante at
466 U. S. 256
(footnote omitted). Inexplicably, however, the Court then proceeds
to ignore the standard the Convention selected. It does rely upon
the practice of the signatories between 1934 and 1978.
Ante at
466 U. S. 259.
Our practice was consistent with the Convention so long as the
price of gold was set by law. It is no longer. One commentator
argued prior to the total demonetization of gold that the market
price of gold should have been used in light of the economic
reality of the early 1970's,
see Heller, The Warsaw
Convention and the "Two-Tier" Gold Market, 7 J.World Trade L. 126
(1973); Heller, The Value of the Gold Franc -- A Different Point of
View, 6 J.Mar.L. & Com. 73 (1974). The response to that
argument rested on the fact that the price of gold was set by law
-- a fact that no longer obtains.
See Boehringer Mannheim
Diagnostic, Inc. v. Pan American World Airway,
Inc., 531 F.
Supp. 344, 353, n. 46 (SD Tex.1981),
appeal docketed,
No. 81-2519 (CA5, Dec. 30, 1981).
The majority is correct in stating that I have no problem with
the conclusion that our practice was consistent with the Convention
when the price of gold was set by law.
Ante at
466 U. S.
254-255, n. 26. We need not speculate on that score,
for, at the outset of the Warsaw proceedings, the drafters
performed the very kind of conversion they anticipated would occur
when a national currency was based on the gold standard -- they
converted the sums expressed in gold francs in the draft proposal
into equivalent sums of new French francs.
The Convention did not, of course, deprive a signatory sovereign
nation of its control over its own currency. Indeed, it was a
recognition of that authority which led the Swiss delegate to
insist that a sum of gold -- rather than a reference to the 1928
French statute -- be specified in the Convention. Congress has
plenary power over our currency.
See, e.g., 79 U.
S. 12 Wall. 457 (1871). In exercising that power,
it may define the dollar in terms of gold. In doing so, and in
periodically adjusting that relationship, it necessarily affects
legal interests in many contractual areas.
See, e.g., Norman v.
Baltimore & Ohio R. Co., 294 U. S. 240
(1935). For example, when Congress passed the Par Value
Modification Act in 1972, setting a new price of gold, Congress
"did not suggest that the CAB should thereafter use a different
conversion factor" for Warsaw Convention purposes, but "the CAB
did, of course, use that price to translate the Convention's
gold-based liability limit into dollars."
Ante at
466 U. S. 255.
This was the only "flexible implementation" of the treaty which
occurred from 1934 to 1978.
Ante at
466 U. S. 259.
The CAB, of course, had no flexibility -- air carriers were bound
by the Convention, and bound by Congress' decisions on monetary
policy,
see, e.g., Norman v. Baltimore Ohio R. Co., supra.
Congress has most recently exercised its authority over the
currency by demonetizing gold completely. That has legal
consequences as well. One of those consequences is that the rate of
exchange between dollars and gold is no longer determined by law,
and it is irrelevant that, when Congress repealed the Par Value
Modification Act it "did not suggest that the CAB should thereafter
use a different conversion factor" for Warsaw Convention purposes.
Congress has not delegated its authority over the currency to the
CAB. And Congress clearly has not delegated authority to the CAB to
violate Article 23 of the Convention -- it has expressly stated
that the CAB's authority must be exercised consistently with our
treaty obligations. Congress itself, of course, does not have the
authority to violate Article 23 short of repudiating the
Convention. Congress naturally could repudiate the Convention and
set its own liability limitation through domestic legislation, but
has not done so.
[
Footnote 2/7]
The Court might as well have selected a figure corresponding to
the dollar value of 12 grams of gold in 1929, or 1934, as that
existing in 1978. Indeed, if the Court fancies itself competent to
decide the proper liability limit necessary to effect the
"purposes" of the Convention, one wonders why it selects a figure
which happens to correspond to a value of a given amount of gold at
any point in time. Since it adopts such a freewheeling approach to
the subject, the Court could, for example, compute the liability
limit in the same basic manner as did the Convention -- dividing
the declared value of all air cargo by the tonnage, and then
doubling that figure to arrive at a per-pound limitation.
Any fixed dollar figure lower than the actual damage figure, of
course, would meet all of the purposes postulated by the Court as
well as $9.07 per pound. But it appears that the Court will be
willing to modify the limit it has set from time to time, for it
states that its limit
"might require periodic adjustment . . . to account both for the
dollar's changing value relative to other Western currencies and,
if necessary, for changes in the conversion rates adopted by other
Convention signatories."
Ante at
466 U. S. 256.
The only reason the Court apparently does not make such an
adjustment is that, since 1978, "no substantial changes of either
type have occurred."
Ibid. Of course, if the standard
adopted by the Convention were enforced, rather than ignored, no
such adjustments would need to be made by courts -- for as the
Court candidly admits, "[s]ince gold is freely traded on an
international market, its price always provides a unique and
internationally uniform conversion rate."
Ante at
466 U. S. 258.
The fact that gold has always had a uniform value -- since, to use
the words of the Swiss delegate, there is but one quality of gold
-- was, of course, a major reason why it was chosen as a standard
of value in an
international agreement setting an
internationally enforceable limitation on liability.
[
Footnote 2/8]
Compare ante at
466 U. S. 253
("[W]hen the parties to a treaty continue to assert its vitality a
private person who finds the continued existence of the treaty
inconvenient may not invoke the doctrine [of
rebus sic
stantibus] on their behalf").
[
Footnote 2/9]
The response of the framers to this assertion by the majority, I
am quite sure, would be "
au contraire." Indeed, on the
face of the majority opinion, only one of the purposes the Court
identifies is not served by the gold standard -- that of a stable
and predictable limit. The other purposes, setting some limit,
setting an internationally uniform limit, and linking the limit to
a real value, are all achieved by the limit adopted by the
Convention. In fact, the Court concedes the first purpose is served
by any standard,
ante at
466 U. S. 256,
and seems to agree that the latter two purposes are better achieved
by the limit adopted by the Convention,
ante at
466 U. S.
258-259. Hence, even if I were to adopt the freewheeling
approach of the Court to the question before us -- that is, an
independent judicial determination of which of several "choices"
would "best effect" the "different and to some extent
contradictory" general "purposes" of the Convention -- I would find
the Court's "choice" unpersuasive.
Gold was selected because it would continue to be an
internationally recognized standard of value, irrespective of what
national governments did with respect to their currencies. It was
also selected to guard against the fluctuating values of
currencies. Gold continues to be an internationally recognized
standard of value. The legacy of eons is not readily discarded.
See generally 1 Report to Congress of the Commission on
the Role of Gold in the Domestic and International Monetary Systems
98 (Mar.1982); M. Friedman & A. Schwartz, A Monetary History of
the United States 473, 684 (1971). Its nominal value is still
overwhelmingly its value in exchange, not its value in use -- it is
not simply another commodity. Fort Knox does not house any pork
bellies. Currencies are worth far less in relation to gold than
they were several years ago, that is, in perhaps bygone jargon, the
currencies have been substantially devalued. The variation in the
relative value of gold to currencies is not the kind of variation
in value that the framers of the Convention wanted to avoid -- it
is one that they desired. Certainly, however, the extent of the
current variation is more than they could have anticipated, and
currencies have not devalued in overall purchasing power to the
extent that they have in relation to gold.
The Court, in support of the standard it has selected -- the
dollar -- thinks that the relative value of various currencies has
remained relatively stable in recent years (a conclusion one cannot
reach based on the data relied upon by the majority). Even if that
were true, all that would mean is that the currencies have not
depreciated in relation to one another -- it does not mean that the
currencies have not devalued. The real value of those currencies
has not been stable, it has been declining. The real value of gold
has not been stable either, but it has not declined since 1929. The
same manifestly cannot be said of the dollar.
The interests in stability and predictability, of course, do
favor the Court's choice. But the fact that the market price of
gold fluctuates on a daily basis does not seem to me to present
particularly serious problems. Indeed, the existence of a
well-recognized daily price provides a simple point of reference
for computing the exact amount of the limit on the date of
shipment. The calculation of insurance rates would have to take
into account the variable character of the gold market, but that is
hardly a matter that underwriters are incapable of evaluating
realistically. And, of course, the problem of computing their
contingent tort liability for cargo would remain less difficult
than the problem they confront in computing their contingent tort
liability to third parties.
The idea that air transport users and carriers are forced to
become unwilling speculators in the gold market is mere rhetoric.
It stands history on its head even to suggest that the Warsaw
Convention's liability limit has been foisted upon air carriers
against their will. If, because of the demonetization of gold, the
gold standard makes air carriers "speculators" in the gold market,
and if the air carriers find this situation unacceptable, they can
urge modification of the Convention. But, of course, they have
already failed to secure Senate approval of the Montreal Protocols.
Today, their attorneys win the battle that their lobbyists
lost.
[
Footnote 2/10]
Incredibly, the majority apparently derives some comfort from
the fact that the liability limit it adopts is approximately
equivalent in purchasing power to that contained in the Montreal
Protocols, doing so in spite of the fact that the Montreal
Protocols were rejected by the Senate.
See ante at
466 U. S.
256-257. Indeed, the CAB accepts tariffs based on the
Montreal Protocols, which passes by the majority without criticism.
Ante at
466 U. S. 257,
n. 29.
[
Footnote 2/11]
For example, one law professor recently wrote in a doctrinaire
fashion:
"Modern jurisprudence regards the distinction Marshall Court
justices sought to make between the 'will of the judge' and the
'will of the law' as a distinction without a difference. The
'legal' decisions of judges are, in the modern consciousness,
necessarily personal and creative. . . ."
". . . All of the modern canons for judicial behavior, and all
of the modern theories of judicial performance, presuppose that
judges 'make' law and that judicial will and legal will are thus
inseparable."
White, The Working Life of The Marshall Court, 1815-1835, 70
Va.L.Rev. 1, 49-50 (1984).
[
Footnote 2/12]
Judges, of course, must perform a lawmaking function, even in
cases involving statutory construction.
See, e.g., R.
Pound, The Spirit of the Common Law 170-15 (1921). But the limits
of our authority and our ability to develop the law should always
be respected. As Justice Cardozo explained:
"No doubt there is a field within which judicial judgment moves
untrammeled by fixed principles. Obscurity of statute or of
precedent or of customs or of morals, or collision between some or
all of them, may leave the law unsettled, and cast a duty upon the
courts to declare it retrospectively in the exercise of a power
frankly legislative in function. . . . We must not let these
occasional and relatively rare instances blind our eyes to the
innumerable instances where there is neither obscurity nor
collision nor opportunity for diverse judgment. . . . In countless
litigations, the law is so clear that judges have no discretion.
They have the right to legislate within gaps, but often there are
no gaps. We shall have a false view of the landscape if we look at
the waste spaces only, and refuse to see the acres already sown and
fruitful. I think the difficulty has its origin in the failure to
distinguish between right and power, between the command embodied
in a judgment and the jural principle to which the obedience of the
judge is due. Judges have, of course, the power, though not the
right, to ignore the mandate of a statute, and render judgment in
despite of it. They have the power, though not the right, to travel
beyond the walls of the interstices, the bounds set to judicial
innovation by precedent and custom. Nonetheless, by that abuse of
power, they violate the law."
B. Cardozo, The Nature of the Judicial Process 128-129
(1921).
[
Footnote 2/13]
Perhaps the majority would insist that it is merely deferring to
the CAB's notions of wise policy. If so, this would mean that the
CAB could have made another choice to which the majority would have
deferred. But surely the majority would not countenance selection
of the choice made by the Convention itself, for the majority
believes that choice would fail to effect any of the Convention's
purposes. Moreover, I cannot see how the majority could defer to a
choice of the limit set forth in the Montreal Protocols, given the
fact that the Senate has recently rejected the Montreal Protocols.
But see n.
466
U.S. 243fn2/10|>10,
supra. Nor can one imagine the
Court "deferring" to the CAB's judgment if it selected the value of
the current French franc. In short, it seems rather clear that the
only potential choice of the CAB to which the majority would
"defer" is the one it selected.