Article 17 of the Montreal Convention holds airlines liable for loss of or damage to baggage, as long as it took place when it was in their possession. No exceptions.
It looks like El Al had a creative — and ultimately, flawed — interpretation.
At least that’s how the Transportation Department sees it. And the DOT has the power to fine El Al, which is exactly what it just did — to the tune of $30,000. Here’s the consent order (PDF).
“El Al fined by government for “deceptive” luggage reimbursement rules”