The Federal Court decided to grant leave to appeal a lower court ruling by the next of kin of three passengers who were on board the doomed MH370.
A three-man apex court bench led by Chief Judge of Sabah and Sarawak Richard Malanjum allowed the application but confined the appeal to a single question of law.
The question is whether the transfer of assets and liabilities from Malaysian Airline System Berhad (MAS) to the new entity, Malaysia Airlines Berhad (MAB) amounts to asset stripping.
It is understood that if the apex court were to decide that the corporate restructuring exercise was a mere transfer of assets and liabilities to the new company, the plaintiffs could include MAB as a party to their suits.
MAB was incorporated on Nov 7, 2014, as part of a restructuring exercise that saw the national carrier changing hands from MAS to MAB.
Lawyer Sangeet Kaur, who appeared with counsel Tommy Thomas, expressed the hope that the appeal could be heard and a decision made this year.
“The next of kin of my clients want to know whether the new MAS could be sued and whether they are liable to pay damages under the Montreal Convention,” she told reporters later.
Last October, the Court of Appeal removed MAB as a defendant in the lawsuit filed by the children and parents of Tan Ah Meng, 46, and wife, Chuang Hsiu Ling @ Cindy Chuang, 45.
The couple and their eldest son, Tan Wei Chew, 19, were among 239 passengers and crew on board flight MH370 when the aircraft disappeared during a flight from Kuala Lumpur to Beijing on March 8, 2014.
Following that decision, the only defendants retained in the lawsuit are MAS and the Malaysian government.
FMT understands that there could be at least 50 suits pending that have been filed by family members against MAB and the government within the two-year limitation period.
Next-of-kin of passengers of MH17, which was shot down near the Ukraine-Russia border on July 17, 2014, killing all 298 passengers and crew members on board, have also filed suits.
It is learnt that some of the litigants have settled their negligence lawsuits out of court with either MAS or MAB.
The families have also included government agencies such as the Department of Civil Aviation, the Immigration Department, the Royal Malaysian Air Force and selected individuals for alleged negligence and misfeasance in public office.
Tommy submitted before the Federal Court today that it was unclear whether MAB would take responsibility for the incidents and pay compensation under the Montreal Convention, to the families of passengers.
“We fear it will be a paper challenge if we are only allowed to sue MAS. It will be the greatest travesty of justice only to find out MAS has no money to pay,” he said.
Tommy told the bench there were also similar suits pending in the courts of China and the United States.
“We do not want the Malaysian court to make a ruling that MAB is not liable while the courts in other countries rule otherwise,” he added.
MAB lawyer Logan Sabapathy submitted that his client should not be sued because there was a vesting order under the Malaysia Airline System Bhd Act which stated that MAS’ liabilities transferred to MAB did not include the MH370 and MH17 lawsuits.
He said the convention applied to MAS, and insurance companies would settle damages payable to next-of-kin of passengers.
Meanwhile, lawyer Shailender Bhar, who is not involved in the case, said the apex court’s granting of the leave to appeal would have wide ramifications on the suits still pending in the High Court.
The lawyer, who is familiar with the convention and Malaysian aviation laws, said under international law, an airline was obliged to pay the next-of-kin of passengers a minimum RM650,000.
“But the litigants could claim a higher amount in damages if they win their suits against the airline and other parties,” he said.