A couple who spent $26,000 replacing their lost luggage have had their claim for compensation from Air New Zealand thrown out by the High Court.
The Disputes Tribunal had earlier awarded them $15,000 - the extent of its jurisdiction.
The couple, who are not named, travelled to London in November to attend an important event, for which they needed to dress accordingly.
But one of their suitcases did not arrive for nine days.
The wife said they were told by Air New Zealand staff they could replace the missing items on a like-for-like basis and spent $26,000 doing so.
When the airline received their claim, it advised them that reimbursement was limited by the Montreal Convention to just $2125.90.
The couple said this was the first time the convention had been mentioned.
The High Court has now overturned the Disputes Tribunal's ruling that the Convention did not apply because the wife had been misled by the airline staff's assurances.
Justice Nation said he sympathised with the couple, but the Tribunal did not have the power to set aside the Montreal Convention.
The head of the Travel Agents Association Andrew Olsen said it would be talking to its members about the case.
"It's a very oft unused but quite, it seems, powerful convention in respect to this matter; and it taking precedence over the disputes tribunal is certainly an interesting twist in the eyes of the law."
Mr Olsen said the best protection for travellers was to use a registered travel agent.
The couple had travel insurance, but because the suitcase was only missing - it was returned after nine days - not permanently lost, they were only entitled to $1900 under their policy.
Insurance Council chief executive Tim Grafton said the case showed the importance of reading the fine print.
"Polices will cover you for items just to get you through, until the delayed luggage is through.
"It won't cover you for loss of enjoyment of your holiday in any form.
This was not lost luggage, it was delayed luggage."
The unnamed couple at the centre of this case were attending "a significant event and related social functions at one of England's oldest and most respected institutions" for which they had to dress appropriately.
Editor of Fashion Quarterly, Sally-Ann Mullin, said it was "totally believable" that a couple could spent more than $26,000 on outfits for a black-tie event.
In his written judgement Justice Nation said he sympathised with the couple and recognised their frustration in having to wait nine days for Air New Zealand to return a suitcase to them from Los Angeles, which he calls "a unreasonable and distressing delay".
"The law, however, means they cannot obtain the remedy they seek."
He said it would be "appropriate" for Air New Zealand to allow for interest on the amount they were paying.
According to Air New Zealand, the bag was delayed at Los Angeles Airport due to "a tagging issue" which meant that it was delivered to the arrival carousel for customer collection and clearance and left unclaimed as the customer was continuing to London.
"Once Heathrow airport staff issued a missing baggage request, the bag was identified as being in Los Angeles and flown to London where it was held for several days at the customer's request before being delivered to their hotel."
