Insurance Minimum coverage - GCAA - UAE

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At the beginning of this year, the General Civil Aviation AuthorityGeneral Civil Aviation Authority (GCAAGCAA) of the United Arab Emirates (UAE) issued an Information Bulletin setting new minimum insurance coverage for carriers.

This initiative, affecting both passengers and cargo carriers (irrespective of their nationality) flying to/from or overflying the UAE territory, purports to bring UAE's civil aviation regulations in line with those in Europe, "in the interest of public protection [...] to insure a proper minimum level of insurance...". It is said to have greater impact on the UAE's freight sector being a collection of small operators having levels of insurance cover below these new regulations they are now required to comply with.

The new rules came into effect on the 1st of February 2010 and will be implemented in a three step approach:

April 1 2010 onwards - carriers will have to provide to the GCAAGCAA insurance documents evidencing compliance with the minimum insurance requirements ("a valid insurance certificate or other evidence of valid insurance");

(iii) January 1 2011 onwards - rules and (ii) extend to any UAE's airspace overflights (the GCAAGCAA may, in accordance with International Law, request evidence of compliance by carrying out random checks).

The minimum insurance coverage amounts introduced by the new regulations are influenced by the international conventions that regulate international civil aviation. The level of third party liability cover follows that established in the Convention on Compensation for Damages Caused by Aircraft to Third Parties - Known as the General Risks Convention - adopted (but not yet in force) at the International Conference on Air Law held middle last year as part of an initiative to modernize the Rome Convention of 1952. The coverage minima are expressed in Special Drawing Rights (SDRs) and pegged to the Maximum Take-Off Mass (MTOM) of the aircraft ranging from SDR750,000 for aircraft below 500Kgs of MTOM to SDR700,000,000 for aircraft above 500,000Kgs of MTOM.

Liability for passengers, baggage and cargo is also clearly based on the limits for strict liability established in the Montreal Convention (with the exception of passengers of commercial operations and passengers of non-commercial operations with aircraft exceeding 2700Kgs MTOM, for which a minimum coverage of SDR250,000/per passenger is required). However, it is curious that although issued in 2010 and being the UAE part of the Montreal Convention, these mentioned new minima stipulated by the regulations mirror the previous limits of the Montreal Convention rather that those in force from the inception of 2010 (established as a result of the inflation factor after ICAO's review).

In addition, both the insurers and the operators, respectively, must provide:

• 1) information to the GCAAGCAA, in advance, of any circumstance that may affect the insurance validity; such duty to be mirrored in the terms of the policy clauses; and

• 2) notification to the GCAAGCAA, in advance, of any cancellation/change to the insurance cover.

• Finally, there are more severe consequences than the "mere" suspension of the operations as mentioned in (ii) above. Failure to comply may lead to:

• withdrawal of the operating license and refusal to land or take-off

• enforced landing

• cancellation (temporary) or withdrawal of the Certificate of Airworthiness of the relevant aircraft performing the operations in breach

• ceasing licenses for flight crew or any other license (temporarily or withdrawal)

• a fine up to AED50,000 and/or imprisonment up to one year.

Breach of these regulations may well affect operations with serious economical impact and personal consequences for those involved or responsible for the breach of the minimum coverage insurance regulations.

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-Ends-

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Clyde & Co LLP, Dubai office
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clinton.swan@clydeco.aee

Middle East media communications
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© Press Release 2010