Missing Malaysian Flight MH370 Q&A: As the lawyers move in, how much compensation will be paid out – and who will be liable?

As the search for clues about the disappearance of Flight MH370 continues, questions are now being asked about the compensation that may be paid to the relatives of the 239 passengers and crew. We look at what factors will decide the size of the payout - and who is likely to be liable.

Q What are the international rules on compensation for relatives of passengers who lose their lives in a plane crash?

A The Montreal Convention 1999 stipulates compensation due if a passenger is killed on a flight. The amount is 100,000 Special Drawing Rights (a “virtual” currency), currently worth £93,000. It also encourages airlines to “make advance payments without delay to a natural person or persons who are entitled to claim compensation in order to meet the immediate economic needs of such persons”. Relatives have already been paid US$5,000 – though the Convention stresses this is not an indication of liability, and will come out of the final damages due from the airline if and when a settlement is reached.

Q That looks like a small amount of compensation?

A It is; the forerunner to the Montreal Convention, the Warsaw Convention, was designed specifically to limit airlines’ liability. In the days when crashes were frequent, it was seen as the only way to allow commercial aviation to grow.

Relatives – as well as the lawyers who are already working on the loss of the Boeing 777, will be seeking much larger sums – probably a minimum of £250,000. The Montreal Convention says that any legal action the carrier can be taken in Malaysia (where the airline is based), in China (its destination) or in the country where the ticket was bought.

However, if it were found that a technical fault in the aircraft was responsible, then action is likely to be taken against Boeing.

Q Reports suggest that relatives of Asian passengers may get much less compensation than families of American victims. Surely that can’t be right?

A If an American passenger bought the ticket in the US, then legal action is likely to be taken there – simply because awards tend to be much more generous than in other nations. It could be, though, that a class action is taken which might result in substantial settlements for every passenger.

Q Could the airline afford to pay?

A Malaysia Airlines, like every major carrier, is insured against the risk of a crash – both for the aircraft itself (worth about £150m) and the much larger sums that are likely to be paid out in compensation to the families of the victims.

Q Will the relatives of the crew be entitled to the same sums?

A Not necessarily. If negligence can be proved, then it is possible. But if there is no final conclusion as to the causes, then things could be different. Depending on local employment law and the views of the court, the tragedy may be counted as a workplace event that triggers a different regime of compensation.

Q What about the costs of the search?

A The search so far has already cost tens of millions of pounds. Nations are taking part in a “look now, talk about money later” basis, but it may well be that they put in a claim to the airline.