Trans World Airlines, Inc. v. Franklin Mint Corp.

1984-06-04

Headline: Court upholds $9.07-per-pound cargo liability limit under the Warsaw Convention, allowing airlines to cap compensation and keeping that dollar-based limit enforceable in U.S. courts despite repeal of the U.S. law fixing gold’s price.

Holding: The Court ruled that the Warsaw Convention’s gold‑based cargo liability limit remains enforceable in U.S. courts and that the CAB‑approved $9.07‑per‑pound dollar limit is not inconsistent with the Convention.

Real World Impact:

Allows airlines to limit cargo payouts to $9.07 per pound in U.S. cases.
Affirms that a federal agency can set the dollar conversion used in airline tariffs.
Limits recovery for shippers who don’t declare higher package value.

Topics: airline liability, international air treaties, cargo shipping claims, currency conversion

Summary

Background

A seller of collectible coins (Franklin Mint) shipped 714 pounds of numismatic packages on an international TWA flight and did not declare a special value. The packages were lost and the seller sued for $250,000. The lower courts used the Warsaw Convention’s gold‑based rule to limit TWA’s payout and the Second Circuit said the Convention’s limit would become unenforceable in the United States after Congress repealed the law that fixed an official gold price.

Reasoning

The Court had to decide two things: whether repeal of the U.S. law about an official gold price had nullified the Convention here, and whether a $9.07 per pound dollar limit was consistent with the Convention. The majority said Congress had not clearly intended to repeal or abandon the treaty, the Convention is self‑executing, and the Executive Branch continued to treat the Convention as in force. The Court also relied on the Civil Aeronautics Board’s delegated authority to convert the gold figure into dollars and on long international practice. It found that a fixed $9.07‑per‑pound figure was a reasonable, stable interim conversion and did not conflict with the treaty’s purposes.

Real world impact

The decision leaves in place a clear dollar cap that airlines can publish and rely on, limits recoveries for shippers who do not declare higher value, and affirms that an executive agency may set the dollar conversion used in airline tariffs. The ruling is a final resolution of the dispute in these cases and allows the CAB or the agencies to adjust conversion rates if international practice changes.

Dissents or concurrances

Justice Stevens dissented, arguing the Court rewrote the treaty rather than enforcing its plain gold‑based language and that the $9.07 tariff conflicted with the Convention’s text.